Public Bill Committee

[Mr David Amessin the Chair]

David Amess: I advise the Committee that I have been told that there will probably be two Divisions at 2.30 pm, which means that we would suspend for about 20 minutes.

Stella Creasy: On a point of order, Mr Amess. I think the Minister is aware of the concern I am about to raise. Committee members will know of the Opposition’s ongoing concern about the plans for the supervision of estate agency, and in particular about Powys county council’s role in overseeing that as part of the new consumer landscape. Last Thursday, the Minister assured the Committee that it was solely that council that was leading on the proposal to supervise estate agency following the abolition of the Office of Fair Trading. Members will know that the Opposition are concerned about that, because the bid documentation that we have seen identifies both Powys and Isle of Anglesey county councils as being involved in the management of the bid.
I therefore wrote to the Minister on 6 March to seek clarification on the bid documents. This morning, I had a response from her to my request for information, and I seek the guidance of the Chair, because although the Minister still states that Anglesey is no longer involved in delivery of the service, correspondence that I have had from Powys county council this week says that it is. More importantly, our request for information that would allow us to assess whether this was an appropriate form of supervision has been treated as a freedom of information request, and I have been told that we will not get an answer until 3 April at the earliest. That is clearly post-Committee. Given that the Committee is asking for information to clarify a point on which there has been this much confusion—there are contrasting statements on the issue—it seems rather strange that we will not get that information in time for it to be considered by the Committee, or indeed the House of Lords, which will look at the issue this evening. I am sure that it will want clarity on who will run which services.
Let me be clear: the note that we have had from Powys county council says that there will be a direct financial interest for Anglesey in the running of that service. That rather seems to go against the Minister’s statement. I wonder whether the Chair can help us to understand whether we should expect that information in time for the Committee to be able to consider how Trading Standards will be involved in the management of this service. If we ask for such information, it is only fair that we get it in a reasonable time scale. I need to be clear with the Chair that my letter to the Minister did not make any mention of freedom of information requests; it made a specific request for information before the end of this Committee’s consideration, and the House of Lords vote.

David Amess: I thank the hon. Lady for alerting me before the sitting to that point of order. I am absolutely sure that the Minister has done, and will continue to do, everything she can to assist the Committee, and I absolutely understand the hon. Lady’s point about time-sensitivity. We cannot have a separate debate on a point of order, but I wonder whether the Minister would like to say something further to that point of order, to continue to help the Committee.

Jennifer Willott: Further to that point of order, Mr Amess. We received the letter on Thursday evening, and replied as soon as we could, with as much information as was available. We have been very open on the issue. We have now debated the subject in a Statutory Instrument Committee, in oral questions to the Department for Business, Innovation and Skills last week, and in Committee. We will provide the rest of the information that the hon. Member for Walthamstow asks for as soon as possible, but she asked for an awful lot of information. We are doing our best to provide it as quickly as we can. We have been very open on the subject and have debated it a number of times. A number of Committee members have participated in debates on the subject in the Statutory Instrument Committee and in this Committee.

David Amess: Chairs of Committees are not responsible for the actions of any Government; it is entirely up to the Government what they release. However, the hon. Member for Walthamstow has put her point on the record, and I am sure that the Minister will deal with her colleagues, and respond to the information that she has just been given, in due course.

Schedule 7  - Enterprise Act 2002: enhanced consumer measures and other enforcement

Amendment proposed (this day): 112,in schedule 7, page102,line31, at end insert—
‘(8A) Subsection (8B) applies if—
(a) an enforcer exercises a function in relation to a person by virtue of subsection (1) or (2),
(b) that function is a relevant function for the purposes of Part 2 (co-ordination of regulatory enforcement) of the Regulatory Enforcement and Sanctions Act 2008, and
(c) a primary authority (within the meaning of that Part) has given advice or guidance under section 27(1) of that Act—
(i) to that person in relation to that function, or
(ii) to other local authorities (within the meaning of that Part) with that function as to how they should exercise it in relation to that person.
(8B) The enforcer must, in exercising the function in relation to that person, act consistently with that advice or guidance.’.—(Jenny Willott.)

This amendment introduces a duty on private designated enforcers to act consistently with advice or guidance given by a primary authority when seeking an enforcement order or undertaking that includes enhanced consumer measures.

Question again proposed, That the amendment be made.

Stella Creasy: This morning, we had a debate on whether, if private enforcement agencies were enabled to take enhanced consumer measures, they would have to take the guidance of a primary authority when they felt that the authority’s guidance was not appropriate. I appreciate the point that the Minister tried to make earlier; she argued that the enforcers were not primary authorities. Let me give her an example of a case in which we are keen to understand how those two factors will interplay. West Yorkshire Joint Services is a primary authority under the statutory scheme. It also has within its auspices Halifax legal services. Which?, as a private enforcer, may be concerned about the sale of legal services by Halifax legal services and may wish to use enhanced consumer measures to obtain information about the legal charges and the limitation of the legal expertise that is promoted on the business’s website. However, if West Yorkshire Joint Services were to say that it had decided to take a different approach to the regulation of the insurance services, who would be the paramount authority? According to the terms of amendment 112, Which? would have to bow to West Yorkshire Joint Services. We are increasingly concerned that some businesses are having to pay for trading standards advice because the fact that they are paying for a primary authority’s advice may have an impact on those businesses’ relationship with that authority.
I am sure that the Minister will say that the questions can be dealt with during the consultation on the role of private enforcers, but given the possibility of such conflicts, it jumps the gun to propose amendment 112 now, when further primary or secondary legislation about private enforcers may be required at a later stage. Such legislation may prove appropriate once the issues that I have raised have been teased out.
Given the scenario I have described, should West Yorkshire Joint Services decide not to use enhanced consumer measures against an insurance company based in its locality but Which? did decide to do so, in such a stand-off, whose interests would be served by Which? having to subserve to a primary authority rather than retain its independence?

Jennifer Willott: There are two angles to this matter. As I said this morning, a primary authority is a local authority that co-ordinates local authority regulation on behalf of the business with which it partners. Under that scheme, there could be an analogous situation in which a local authority could disagree with the primary authority.
A local authority in which part of the business operates could disagree with the view of the primary authority, as the hon. Lady has suggested, and a formal determination process to resolve that is set out in statute. That scheme has been in operation since 2009, and the determination process has never been used, because disputes have been resolved informally through negotiation. If a private enforcer wished to take enforcement action inconsistent with the advice of the primary authority, I envisage that it would pursue the same route. Discussion of the matter would be the first port of call, but if that failed to produce a resolution, a formal dispute resolution process already exists as the last resort.
In terms of who would be responsible for pursuing an enforcement action, as a private designated enforcer Which? can already take civil actions against traders to stop actions that are detrimental to consumers, but it has never used the enforcement powers given to it in 2005. As a result, as the hon. Lady said, we have committed to carry out a consultation and an impact assessment before extending the proposed measures to Which? That consultation will consider how Which? will use those measures and the interaction with other enforcers. To put it in context, under the Enterprise Act 2002, which designated Which? as a private enforcer, if it took action, it had to inform the Office of Fair Trading—in future the Competition and Markets Authority—that it intended to bring a civil enforcement action. That included any decision to pursue enhanced consumer measures. That enabled the OFT, currently—it will be the CMA—to exercise its functions as a co-ordinator in order to determine who would be the most appropriate enforcer to take action against a particular trader. That process is in place now for Which?, as a designated private enforcer. The co-ordinating role of the OFT—as I said, in future the CMA—is an important function within this process. We will consult on these issues, but that is the process currently in place, and I imagine that we will consult on having a similar system for extending the powers into this area.

Stella Creasy: I thank the Minister for her answer, but she has not engaged with the scenario we drew in order to understand how these situations will be resolved. We are going round in circles. The whole point about a private enforcer body is that it has independence and a capacity to pick up on issues that public bodies might not be willing to challenge. The amendment undermines that and seems premature. As the Minister herself said, Which? is already a private enforcer, and the amendment will restrict its independence of operation. We have made our point, but the question of the independence of private enforcers is not being properly addressed. The Government are already presuming that there is no benefit in this regard. If private enforcers will have to operate in the same way as public enforcers, in that they will have to have regard to primary authorities, what is the difference? What is the added value in giving enhanced consumer measures to a private enforcer in those circumstances?
As I said, we seem to be going round in circles. Given what the Minister has said, I presume that the Government have not explored this area properly. We have raised these issues and put them on the record, and I hope they come up in the consultation.

Amendment 112 agreed to.

Schedule 7, as amended, agreed to.

Clause 80  - Private actions in competition law

Stella Creasy: I beg to move amendment 109, in clause80,page42,line16,at end insert—
‘(1A) A year after the commencement of this section, the Secretary of State will review the powers set out in Schedule 8 and report to Parliament on—
(a) the number of private actions commenced under this power;
(b) the redress provided to consumers under these private actions; and
(c) the scope and potential effect of expanding these private actions powers to all areas of consumer protection law.’.
Opposition members of the Committee know this as the “private actions” clause—the Government’s attempt to increase the capacity for private actions to take place as a form of consumer redress. All of us recognise that the absence of any avenue of enforcement gives an advantage to firms that break the rules. If there is not a sense that accountability may come—be it through an alternative dispute resolution system or through the courts—those who want to exploit people will do so with impunity, and those who do not will suffer the consequences of the resulting lack of consumer trust and confidence.
The OFT calculated that the financial benefit to consumers of the competition regime is some £810 million, because it improves the prices and quality of goods available to them. However, we also know that businesses view the private actions approach—my hon. Friend the Member for Stoke-on-Trent South has strong feelings on this issue—as one of the least effective in the UK. It is therefore welcome that the Government have consulted on how to reform the private actions framework to ensure that it is more accessible and that it can deal with problems such as the prohibitive cost to consumers of participating in legal action. A particular issue is the likely low level of redress that is received through joint action, which is often the only way that people can subsidise such actions.
Members will be familiar, following this morning’s discussion, with attempts to establish a micro-private action process at a local level. Here, we are discussing what we might term macro-private action at a national level. A number of consumer bodies are concerned about the Government’s proposals. They feel, having looked at how we might reform the private action culture, that we have missed an opportunity to make the process as robust and effective as it could be. Again, my hon. Friend the Member for Stoke-on-Trent South has some views about that. We know that such cases are rarely brought before the courts, and there is a distinction between the cases that the High Court and the Competition Appeal Tribunal can deal with. The issue for us, therefore, is: what can we learn in the process of formalising the roles that would prevent the American-style litigation culture, which everyone agrees is not in the interests of British consumers or businesses, and bring benefit to competition law from the increased and enhanced perspective of such private actions, to ensure that competition acts in the interests of the consumer?
Amendment 109 is about looking at how the system would work. The Government’s consultation looked at many issues relating to private actions; in particular, whether to change from an opt-in to an opt-out situation. In opt-in, consumers and those affected by potential cause of detriment would have to opt into a case, whereas in opt-out those affected would be automatically included unless they opted out. We recognise the concern expressed by businesses that the solely opt-out proposals, which would automatically include all those who might be covered—for example, if one were to take on the energy companies, all energy consumers would be included—might lead to an increase in litigation. I note, however, that the Government challenged the idea that purely opt-out processes would somehow lead to a mass culture of litigation. They said:
“The Government considers that other factors in the USA are more directly responsible for the high volume of litigation in the US. These include treble damages—imposing such a high risk on defendants that they may be encouraged to settle cases to which they have a reasonable defence—the lack of the loser-pays rules and jury trials.”
None of those proposals is put forward in the Bill, but there is concern that, because of the way the legislation has been drafted, the limited scope of opt-out arrangements may inadvertently act against consumers. That is what we want to test today; it is the sort of issue that, if our amendment is supported, any review would consider.
In particular, we are mindful of the case made by Which?—we are back again with our favourite private enforcers—who have been champions of consumer interest for many years. It is concerned that current rules, which require a just and reasonable collective settlement to be set out by the Competition Appeal Tribunal, may not act in the consumers’ interest, because it would be difficult for them to understand what is just and reasonable owing to the lack of information on the detriment they faced.
In practice, that means that if an organisation were to be under a private action because there was concern that it had acted against consumer interests, it would hold all the cards. It would know the business model it was operating, the level of the detriment and the profit it was making as a result. Therefore, any settlement that it might offer would be informed by that process and if it were sued by a collective of consumers—perhaps with Which? acting on their behalf—it could set out what it considered to be a fair and reasonable sum for compensation and it would be difficult for the complainant to know whether that was a fair reflection of the risk faced by the people they were representing and, therefore, whether that was a fair offer.
Which? raised with us another issue on that same question of whether consumers affected by a complaint who had been offered a settlement would really have enough information to understand whether that was fair. They may then proceed to legal settlements, only to find that a judgment has gone against them owing to information that they were not aware of. They may have been presented with a just and reasonable offer, but, as they did not have cause to know that, they may have acted against their own interests by going on with the case and therefore ended up having to pay fees, costs and compensation to the trader they were in dispute with. Which? rightly points out that that puts considerable weight against the consumer’s rights. It is almost like playing “21”: no one knows what cards will come up, but an assessment still has to be made. Good consumer law tries to ensure that everyone plays with the same deck of cards and that everyone has as much information as possible to make good choices. We are sympathetic to the points Which? makes about whether it would be right to require traders themselves to certify that a settlement was just and reasonable, and to allow courts to disallow costs for someone who proceeded with a case but lost it, on the basis that they had been offered a reasonable settlement but could not have reasonably known at the time that the settlement was reasonable.
The Government can explore all those issues, given that they are trying to encourage tentatively, not an explosion, but an increase in the amount of private action, in order to have a cleansing effect on consumer detriment in our contemporary economy and to ensure that businesses are aware that they will be held to account if they act unfairly or unjustly. Without the review process, we will not know whether the Bill will have that impact. What we want to know is whether it works and does the things we hope it will do: make it easier for groups of consumers who have been affected by unfair practices to challenge them under competition law; and allow the Competition Appeal Tribunal to play a stronger role in being a champion.
I shall leave it there, as I am conscious that other members of the Committee want to speak on the issue and raise concerns. I am also conscious that there will be a vote in the House shortly. I hope the Minister will respond constructively to our concerns about the system the Government are proposing, which requires consumers to have access to an amount of information that it is not reasonable to expect them to have unless there are additional safeguards in law.

Robert Flello: May I seek a nod or a shake of your head, Mr Amess, as to whether we are debating clause stand part at the same time? [ Interruption. ] I will take that as limited permission to wander slightly.
My hon. Friend the Member for Walthamstow referred to the card game Pontoon. That is an interesting analogy, because we are talking about a situation where someone does not know what the cards are. At least with a normal deck of cards, a person knows that there are four suits, and so many picture cards and so many number cards. The problem with the asymmetry of information—

David Amess: Order. A little bird has whispered in my ear that this debate will also be the clause stand part debate. The hon. Gentleman may therefore raise wider matters.

Robert Flello: I am most grateful, Mr Amess, for the little bird whispering in your ear and for your conveying that message to the Committee.
As I was saying, at least with a pack of cards, someone knows pretty much what is in there. The problem that consumers have with the situation as it stands is that they do not know what they do not know, as has been famously said in the past.
There is thus this crazy situation where someone may well have a just and reasonable settlement, but representatives have no way of knowing whether it is just and reasonable. They will not be able to know what the cards are, which could be something completely different. They will not be privy to the data they need to consider when looking at the loss that a victim might or might not have suffered. The information is exclusively in the hands of the defendants, which cannot be right, and something must be done to address that.
I want to put on record my thanks to Mark McLaren from Which? for providing me with helpful briefing notes and supporting information to clarify a couple of points that I want to make.
One of the examples of providing information that has been proposed—the Minister may well refer to this—is disclosure. The problem with that, however, as colleagues across the Committee will know from their constituency work, is that it normally happens so late in the day that the party to whom a disclosure has been made does not have the time to wade through the bundle and deal with the information in there. Indeed, it may be so late in the day—possibly years later—that important decisions have already been taken that could well have led to the person concerned stopping proceedings had the disclosure come at a more opportune moment.
I therefore hope that the Minister will pick up the wider issue about the clause, namely how somebody can know whether they have a good case, and whether the offer made is just and reasonable or completely unjust and unreasonable. At the moment, people are playing Pontoon in the dark, blindfold, with a mixed pack of cards, or possibly on a Monopoly board. The situation is completely nonsensical and needs to be addressed.
In terms of certifying collective proceedings, I understand that the Select Committee on Business, Innovation and Skills said in its pre-legislative scrutiny report that accepting its recommendation 67 on streamlining the process would
“be crucial to ensuring the effectiveness of, and preventing abuse of, the new collective actions regime.”
As things stand, certifying collective actions acts a barrier. The Bill does not do much to change that.
I will give an example from back in 2007. I understand that Which? is a designated body under the Competition Act 1998 but has used its powers only once. In 2007, it took collective action against JJB Sports regarding alleged price fixing on certain football shirts in contravention of competition laws. The case was settled and Which? was able to provide compensation for some of the consumers affected, but that example speaks volumes: the one and only case there has been was in 2007. That shows that there are barriers and that something needs to be done.
The opt-in basis for actions under the Competition Act leads to low consumer take-up. There are practical hurdles and difficulties about evidence. If it is some time—years, perhaps—since the purchase, and a receipt eludes the person concerned, is there no other way that they can prove purchase? In the one and only case that has been brought, out of the potentially millions of people who had suffered loss, only around 1,000 were able to benefit from the settlement. That shows that the situation is not working. The clause does not go far enough to address that.
Finally, we have been pointed in the direction of research by the European Commission that shows that the overwhelming majority of UK consumers would be more than willing to defend their rights in court if they could join with other consumers who are complaining about the same matter. I am sure that the Minister wholeheartedly agrees on that and is keen to ensure that such actions can happen, but given that the Bill will not make any changes, there is an issue that needs to be addressed.
Amendment 109, tabled by my hon. Friend the Member for Walthamstow, is a good way of tackling the problem. It gives the Secretary of State a finite period in which to look at the issue again, and review it to see how the situation can be improved. I would like the Government to bring forward their own amendment or new clause to address the matter on Report, and to take the issue on strongly, but in the absence of that, I will certainly support the amendment, if my hon. Friend presses it to a vote. If she decides to withdraw it, so be it, but I hope that the message goes through clearly to the Minister.
If the Minister has not had the chance to read the papers circulated by Which?, I hope that her officials will have the chance to read them and will convey to her that the proposal is a good idea. When she responds, I hope that she will address that point.

Jennifer Willott: I am not sure how far I will get, as we expect the Division bell any minute.
An effective competition regime benefits both the economy and consumers, which we can all agree is a good starting point. As part of that, it is important to ensure that consumers and businesses have the ability to obtain effective redress for breaches of competition law. Amendment 109 would require the Government to report to Parliament on a range of different things: the number of private action cases taken, the level of redress paid to consumers and the impact of expanding the provisions to all areas of consumer protection law. The hon. Members for Walthamstow and for Stoke-on-Trent South both raised the issue of—[Interruption.]

Sitting suspended for Divisions in the House.

On resuming—

Jennifer Willott: As I was saying before we were so rudely interrupted, the other issue that hon. Members raised was how people can know whether a settlement that they are offered is just and reasonable. I will go through the issues in turn.
Collective action cases can be commenced only in the Competition Appeal Tribunal. As part of its yearly work, CAT publishes an annual review containing a list of cases taken forward in the previous 12 months and a summary of the judgments made. That provides information about the number of cases commenced under the revised regime, and the level of redress paid to consumers. The report is not laid before Parliament, but it is publicly available on CAT’s website, so the information will be on the public record.
We are also taking action in the Bill to promote alternative dispute resolution. Parties should consider using ADR whenever possible and court action should be used only as a last resort.

Robert Flello: Of course, ADR is good and important, but it is no good going into dispute resolution if one party does not have data that the other party does have.

Jennifer Willott: If the hon. Gentleman will let me make a little progress, I will address his point.
The amendment would not incorporate any redress that is paid to consumers through ADR in the figures that are being asked for, even though the amount paid through redress could be considerable. However, I believe that the intention of the amendment, as regards the information to be gathered, will be covered by CAT’s publications. That relates to paragraphs (a) and (b) of the amendment.
Paragraph (c) is about the right for consumers to take collective action on consumer law. We discussed that this morning, and I highlighted the concerns that a number of people raised about the proposal; the Opposition’s own report on the issue raised a number of concerns about doing that, too. As I said this morning, we believe that enhanced consumer measures are a better way of achieving a similar result, with fewer of the associated problems.
On proving that the settlement offer is just and reasonable, the Bill requires CAT to certify a settlement only when it is just and reasonable, and it requires all parties involved to submit evidence to CAT. One party will submit evidence of detriment to consumers and the other will provide evidence about its case. CAT will then certify whether the settlement is just and fair. That seems to be the appropriate place to do that. The Government believe that there is already a sufficient safeguard to allay concern in that area, because CAT must have sufficient evidence before it in order to feel able to agree that the settlement is just and reasonable.

Andrew McDonald: “Sufficient evidence” is distinct from “all of the evidence”. In proceedings, a litigant would be obliged to provide a list of documents, and to disclose those documents that were pertinent to the issue at hand. I hope that the Minister can see that there is a great distinction between “sufficient evidence” and all the information to which parties should have access.

Jennifer Willott: I do not think that CAT will certify a settlement agreement if it does not feel that it has been given enough information to decide whether it is just and reasonable. It will have powers to seek and call for more evidence from all parties before making a decision on the settlement agreement, including from third-party experts, if it feels, as the hon. Gentleman highlighted, that it does not have the evidence that it needs. It will be able to do that to ensure that it has enough evidence to satisfy itself that it can certify the settlement.
For the collective settlement regime to work, consumers must be reassured that the offer of redress is appropriate—that is a really important part of the system’s operating—so paragraphs 10(5) and 11(8) of schedule 8 state that CAT can approve the settlement only
“if satisfied that its terms are just and reasonable.”
The second mechanism for alternative dispute resolution in this part of the Bill grants a new power for the CMA to approve voluntary redress schemes. When the UK competition authority finds an infringement, it is important that a business should have the opportunity to offer redress voluntarily, if it is so minded. Paragraph 12 of the schedule therefore enables the CMA to approve a redress scheme. A business will be able to offer a scheme after an infringement decision has been made, the evidence having been considered and made available, or at the time when a decision is made. Certification by the CMA will reassure consumers that the scheme is fair. There are two slightly different circumstances, but the idea is that in both sets of circumstances an independent arbiter would make a decision, having looked at the evidence to decide whether that settlement agreement was just and fair, so consumers can have faith that the offer that they are being made is reasonable in the circumstances.
I hope that that has answered the queries of the hon. Members for Stoke-on-Trent South, and for Walthamstow. I hope that the hon. Member for Walthamstow feels able to withdraw her amendment.

Stella Creasy: I thank the Minister for the update; she says that the first two paragraphs of the amendment will be covered, that there will be a review of the powers, and that the information in question will be gathered. However, there is a concern; it would be useful if the Minister could set out one point more clearly. She said that she was confident that CAT would not certify a settlement if it does not think it is just and reasonable, or feels that it is not being given the information that it needs to make that assessment. However, that relies on it knowing what information it ought to have been given.
We are interested in exploring the point that Which? makes fairly about who is responsible for providing all that information—for example, for disclosing the entirety of how a business model works, so that CAT can assess whether detriment has occurred, and therefore whether the information it is provided with is whole. We were talking earlier about playing 21 or Pontoon. This is about ensuring that all 52 cards are disclosed to CAT, so that if someone is consistently dealt hands in the low 10s or 11s, or even hands of 22 or 23, they know why. That is the analogy.
On reviewing the number of private actions, it would be useful to know whether the Minister envisages looking at the scope of the information provided, and particularly at whether CAT feels that it is getting the full whack, as it were. We are sympathetic to the position of Which?: a lack of information creates a perverse incentive for the trader not to co-operate wholly and fully with CAT, to minimise any potential settlement suggestion being made. If the Competition Appeal Tribunal had the power to compel the disclosure of certain evidence, that would make a difference. It would be interesting if the Minister committed to reviewing the use of those powers to see whether people were co-operating.

Robert Flello: That would also, of course, provide a disincentive to the consumer to agree early on, because they would want to go through the process to ensure that the information was disclosed and certified.

Stella Creasy: My hon. Friend is absolutely right. Those points are about how CAT will work in practice, given that it will take on stand-alone and follow-on cases. We want to make sure that it can provide the cleansing effect that the Government seek.
I am slightly confused by the Minister’s suggestion that alternative dispute resolution is promoted in the Bill, and it would be helpful if she set out where. I am mindful of the fact that the Government have today published the consultation on how they will implement the EU directive on ADR.

Stephen Doughty: A remarkable coincidence.

Stella Creasy: As my hon. Friend says, that is a remarkable coincidence, given that we tabled amendments on the matter today.
Earlier, the Minister made particular play of the fact that the consultation on ADR would go alongside the Bill but would not be part of it. It would help us, especially as we come on to the new clauses, if she clarified her remarks on ADR. Will she explain how we will ensure that the Competition Appeal Tribunal has all the information that it requires, rather than simply being able to make a judgment on the information provided to it, and will she explain where ADR fits into the legislation? After all, we are trying to understand the Minister’s commitments on how the system will work in the context of the Bill.

Andrew McDonald: Does my hon. Friend agree that if we look at how ordinary civil litigation operates—getting to the initial case management directions, which include disclosure by way of listed documents, so that each party is fully aware of the hand that the other possesses—a case can be referred to ADR with both parties in full possession of the facts?

Stella Creasy: As ever, my hon. Friend’s legal background adds volume and depth to our questions to the Minister, and I hope that she will take into account the point that my hon. Friend has made. I am conscious that the Minister is scribbling notes, and I want to give her an opportunity to pull everything together. If she is happy to answer those questions, we are keen to hear her responses.

Jennifer Willott: Opposition Members are raising concerns about the idea that CAT would not have the evidence that it needed to certify a decision. It has a lot of experience in this area—it has been operating for a while, and it is extremely competent—and it has the power to ask for the evidence. Its members are experts in their field, who know a lot more than us mere mortals in Committee about the intricacies of cases before them.
The draft rules that we published yesterday for CAT state that evidence must be submitted to it in order for it to consider a settlement offer. CAT can also ask third-party experts to provide evidence, and to comment on the evidence that a business has submitted. If CAT is concerned that it does not have all the information that it needs to make a decision, it can ask for more information. If a business refuses to provide that information, that may ultimately be contempt of court. The idea is that businesses would work with CAT, however; it is not in their interests not to. Given his experience, it would be really helpful if the hon. Member for Middlesbrough looked at the draft rules and fed back any concerns. Those draft rules have been published, so they are available to the Committee during its deliberations on this subject.
The hon. Member for Walthamstow asked about ADR in the Bill. The voluntary redress scheme in competition cases—as I said, that will be certified by the CMA—and the CAT settlement without a court case are forms of ADR. As she said, we have published the consultation today, and we will consider the consultation, and ADR more broadly, when we reach one of the later clauses. I hope that answers the questions raised by Opposition Members.

Stella Creasy: I thank the Minister for her answer, but let me see whether I can be helpful. The draft rules on the Competition Appeal Tribunal state that it will have the power to order disclosure by a number of different parties on any terms it thinks fit. For the record, will she state that the Government intend that the Competition Appeal Tribunal may require disclosure of information to ensure that a settlement is just and reasonable? In other words, can the Competition Appeal Tribunal set a direct requirement that will be taken into account in its operation? It would be helpful if the Minister could put that on the record.

Jennifer Willott: Yes.

Stella Creasy: Marvellous. We have certainly made some progress on this issue, and we are happy to withdraw our amendment, with a caveat. I draw the Minister’s attention back to the previous amendment on private action at a local level and how breaches in consumer protection law can be addressed. Although the national courts might not necessarily be the best approach, we need to do something about local enforcement. Although she is slightly dismissive of proposed paragraph (c), I encourage her to reconsider local enforcement and how we bring people together at local level to address, say, a dodgy builder or second-hand car salesperson, because that is where most people experience detriment. As yet, the Bill does not have an answer to the question of how we might help people individually and privately to work together to take action. We believe that would be a useful third way, shall we say, between private action and an opt-in process on the subject of consumer detriment in people’s everyday lives.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 80 ordered to stand part of the Bill.

Schedule 8  - Private actions in competition law

Jennifer Willott: I beg to move amendment 113, in schedule8page103,line38, after ‘(3)’ insert
‘which a person who has suffered loss or damage may make in civil proceedings brought in any part of the United Kingdom’.

This amendment and amendment 114 clarify that the jurisdiction of the Tribunal is the same as the High Court and Court of Session, subject to any differences relating to limitation or prescription.

David Amess: With this it will be convenient to discuss Government amendment 114.

Jennifer Willott: These amendments clarify that the territorial jurisdiction of the Competition Appeal Tribunal is the same as that of the High Court and the Court of Session. Under our proposal, a consumer or business will be able to bring forward a claim for damages for a breach of either UK or European competition law. The Bill’s current drafting means that it would be possible for a claim that has no connection to the UK to be brought before the CAT, such as a case where the infringement of competition law did not take place in the UK or where both parties were based outside the UK. That would result in the CAT having a greater territorial jurisdiction than either the High Court or the Court of Session. The Enterprise Act 2002 already provides that the CAT’s jurisdiction is the same as the jurisdiction of the ordinary courts, and I see no reason to depart from that in the Bill. The amendments will ensure that that is the case.

Amendment 113 agreed to.

Amendment made: 114, in schedule8,page104,line7, at end insert—
‘(3A) For the purpose of identifying claims which may be made in civil proceedings, any limitation rules or rules relating to prescription that would apply in such proceedings are to be disregarded.’.—(Jenny Willott.)

The explanatory statement for amendment 113 also applies to this amendment.

Jennifer Willott: I beg to move amendment 115, in schedule8,page106,line21, after ‘(5)’ insert ‘Subject to subsection (5A),’.

This amendment and amendment 116 allow the Tribunal to award all or part of any unclaimeddamages in collective proceedings towards the costs of the representative.

David Amess: With this it will be convenient to discuss Government amendment 116.

Jennifer Willott: The amendments will allow the Competition Appeal Tribunal to order that any unclaimed damages be used to cover a claimant’s legal costs. The Bill currently requires that all unclaimed damages be paid to the Access to Justice Foundation, but the Bill also enables the CAT, through its rules, to consider the suitability of a representative’s funding arrangements. It is important that the CAT has discretion to ensure that the funding arrangements are fair and appropriate. The current requirement on unclaimed damages in the Bill would undermine that.
One option to fund opt-out cases would be to use unclaimed damages to cover all or part of a claimant’s costs, which could include any success fee agreed with a legal representative and any insurance taken out. It is imperative that consumers should be the beneficiaries of redress, and the amendment will mean that legal costs can be recovered only after consumers have claimed their redress. It is also right that any amendment on collective redress does not undermine the safeguards that are essential to the regime.
First, if there are cases that do not result in any unclaimed damages, the representative will not be able to recover their legal costs from the damages pot. Secondly, businesses will not be paying any additional redress; they will still be paying only for the harm that they caused. Thirdly, the use of unclaimed damages to pay costs will have to be approved by the CAT.
The amendments are integral to ensuring that consumer bodies and bodies for small and medium-sized enterprises will be able to fund collective action cases. Without them, it would be difficult for consumer bodies to bring a case.

Amendment 115 agreed to.

Amendment made: 116, in schedule 8, page 106, line 25, at end insert—
‘(5A) In a case within subsection (5) the Tribunal may order that all or part of any damages not claimed by the represented persons within a specified period is instead to be paid to the representative in respect of all or part of the costs or expenses incurred by the representative in connection with the proceedings.’. —(Jenny Willott.)

The explanatory statement for amendment 115 also applies to this amendment.

Jennifer Willott: I beg to move amendment 117, in schedule 8, page 111, line 44, leave out ‘only if that person’.

This amendment and amendments 118 to 120 introduce a requirement for the Tribunal to consider whether or not it is appropriate for a class member to act as a representative in collective settlement proceedings.

David Amess: With this it will be convenient to discuss Government amendments 118 to 120.

Jennifer Willott: These Government amendments are designed to introduce a “just and reasonable” test for the Competition Appeal Tribunal to apply in collective settlement cases. The Bill currently requires the CAT to undertake an assessment of whether a representative body is appropriate to act as a representative in a collective settlement. The amendments are designed to introduce the same requirement for individual class members. They will also have the effect of harmonising the requirement, so that it applies to both collective settlements and collective proceedings.
During the pre-legislative scrutiny, the Select Committee on Business, Innovation and Skills recommended that the “just and reasonable” test be extended to class members in respect of collective proceedings. The Government accepted that recommendation, as there might be instances in which it is appropriate for the CAT not to approve an individual class member—for example, if the class member has previously been declared bankrupt or does not have the financial means to bring the case. On reflection, the Government believe that it is also important to introduce the “just and reasonable” test in the case of collective settlement. The same instances in which it might be inappropriate for a class member to act as a representative in collective proceedings would also apply to a collective settlement. It is therefore important that the CAT be given the necessary discretion to reject a proposed representative if it deems the person to be unsuitable.

Stella Creasy: I rise to speak because that I believe that if we create the potential for someone to be rejected as a representative, having come forward, there will inevitably be consequences, and it would be helpful to understand how the Government envisage those consequences.
Let me give the Minister an example that we want to explore in order to understand the position. If Which? wanted to represent a group of small businesses that wanted to bring a claim because they felt that they had been mis-sold a particular service or product, but the Competition Appeal Tribunal decided that it was not the appropriate body to represent small business—perhaps it felt that the Federation of Small Businesses should do so—what would be the consequences? Would that mean that the case would have to be brought by another organisation? Would there be any expectation that another organisation would bring it? Would there be redress for the businesses or consumers in question in any other place?
We are seeking to question not whether that might be an important proposal for the tribunal, but simply what the consequences of such a power to reject a proposal might be and whether the Minister is envisaging stop-gaps for those who would be affected by any such decision.
I am conscious that the Minister wants to ask a question of her officials. I am happy to let her scribble something down, but I am winging it a bit now—I am not sure that I can think of any other examples. Perhaps someone else would like to chip in.
 Jenny Willott  rose—

Stella Creasy: I will happily take an answer from the Minister now.

Jennifer Willott: I can start to answer the hon. Lady’s question. There may be scenarios in which it would be inappropriate for a class member to act as a representative—for example if, as I said, they had been declared bankrupt or did not have the financial means to act on behalf of the group. Let me give another example. There may be a conflict of interest, or something like that, that meant that they would not be the most appropriate person to act on behalf of the class. The exact reason why a class member was refused would be left to the CAT to explain. However, we envisage that the class of people would be able to submit an alternative class member to the CAT or, indeed, select a representative body to put someone forward to act on their behalf. However, we think that it is important that the CAT has discretion over whether to approve the class member if concerns have been raised.
The amendments are about a person rather than an organisation, and the requirement set out in them is already represented in the Bill. We are talking here about an individual person acting on behalf of a group of consumers who have been affected, so it is about that person. The CAT will also consider whether an organisation is the most appropriate body to represent them, but we want to ensure that the CAT has the discretion to take into account the issues associated with that person, if there are any.

Stella Creasy: I thank the Minister for that response. Will she clarify what redress, if any, a person or organisation would have should the CAT decide that they were not an appropriate representative ?

Jennifer Willott: I can write to the hon. Lady with clarification on that point.

Stella Creasy: I appreciate that the Minister is not sure about that. I wish to put it on record that the Opposition are concerned that when there is a power to exclude somebody, they should have a natural right to challenge it. There needs to be co-ordination in the process, because in the scenarios that the Minister envisages, it could be substantially and materially detrimental to a particular individual to be excluded from a class for a certain reason.

Jennifer Willott: rose—

Stella Creasy: I appreciate that the Minister is going to say that they will have the ability to put forward another class, but surely jurisprudence means that there should be an ability for somebody to appeal if such a decision is made.

Jennifer Willott: Can I make a clarification? We are not saying that somebody will be excluded from being part of the class. The amendments are about whether they can act on behalf of that group. We are talking about opt-out competition actions, and they would still be part of the group taking action. This is about who is the best person to represent that class. They would not be excluded from any of the legal action.

Stella Creasy: I appreciate that that is the Minister’s reading. My point is that if somebody has put themselves forward to be a representative, there is usually a reason why they feel they would be the best representative. They may feel that the representation in the tribunal process is not as robust or resolute as they wish it to be. Ergo, there would be an expectation that they would have an ability to challenge any decision to exclude them as the appropriate representative. The Minister does not have details about that process. I hope that maybe the note coming through to her says that there is a process—

Jennifer Willott: I will write to the hon. Lady.

Stella Creasy: The Minister simply says that she will write to me. Again, in those circumstances one would understand if somebody felt aggrieved and looked for a second opinion, which is, after all, what an appeals process is. It is not an uncommon principle to have an appeals process when such a decision is made. It seems rather unusual that there does not seem to be one in this instance.

Amendment 117 agreed to.

Amendments made: 118, in schedule 8,page111,line46, after ‘(a)’ insert ‘whether or not that person’.
Amendment 119, in schedule 8,page111,line47, leave out ‘or’ and insert ‘but’.
Amendment 120, in schedule 8,page112,line1, leave out from ‘(b)’ to ‘the’ and insert ‘only if’.—(Jenny Willott.)

The explanatory statement for amendment 117 also applies to these amendments.

Schedule 8, as amended, agreed to.

Clauses81 to 86 ordered to stand part of the Bill.

New Clause 2  - Right to corrective action

‘(1) This section applies if either—
(a) the responsible economic actor has identified that goods supplied present a health and safety risk to the conusmer, or
(b) the appropriate authority has identified that goods supplied present a risk to the public safety, and
as a result, the product is subject to corrective action by either party (a “recall action”).
(2) The consumer has the right to expect that the responsible economic actor for any goods supplied subject to a recall action must take all reasonable steps to inform all persons affected, or likely to be affected by the safety risks from the goods, within the shortest period of time practicable.
(3) The consumer, if placed at risk by goods subject to a recall action, has the right to prompt and effective action by the economic actor of that product to ensure that—
(a) the defect posing a safety risk to any persons affected or likely to be affected is eliminated;
(b) the actions required to achieve (a) do not cause significant inconvenience to the consumer; and
(c) all costs associated with the recall action are borne by the reponsible economic actor.
(4) The Secretary of State will periodically gather and make publicly available information relating to safety incidents caused by recalled goods, and estimates of how many such goods still remain unaccounted for.
(5) The effectiveness of recall actions, and the procedures in place to achieve successful recalls, will be the subject of periodic review by the Secretary of State, with reference to public information on recalls in subsection (4) and any other relevant data.
(6) For the purposes of subsections (4) and (5), the Secretary of State must consult with—
(a) market regulators;
(b) relevant authorities; and
(c) any other bodies he thinks appropriate.
(7) For the purposes of this section “economic actor” means—
(a) a “trader” as defined in section 2(2), or
(b) a manufacturer of “goods” as defined in section 2(8).’. —(Fiona O'Donnell.)

Brought up, and read the First time.

Fiona O'Donnell: I beg to move, That the clause be read a Second time.
The new clause was tabled by the hon. Member for Foyle, who was responsible for working on this issue for some time. Unfortunately, there are important events back at home and he needs to be there. My name has been added to the new clause in the correct way, and I am grateful to have the opportunity to speak in support of it.
I have been concerned at times during the passage of the Bill, when I have spoken about issues like scatter cushions and balls of yarn, that the proceedings might be seen as frivolous by people who are involved in them or following them. That has never been my intention; it is important that we bring such issues to light, because they relate to real challenges and injustices for real consumers. There has never been an attempt to trivialise matters. With new clause 2, we turn to some of the most serious aspects of what can happen when the experience of a consumer and a trader goes very badly wrong.
The new clause covers the right to corrective action, which is more commonly known as product recall. Product recalls occur when a fault presenting a safety risk to consumers is uncovered in a product or product line. There are currently gaps in the coverage for goods. The Minister and other hon. Members will be aware that car and vehicle faults are already covered by the Vehicle and Operator Services Agency’s code of conduct with manufacturers and the General Product Safety Regulations 2005. Food recalls are the responsibility of the Food Standards Agency, and drugs are the responsibility of the Medicines and Healthcare products Regulatory Agency. When it comes to everything else, there is no single agency responsible.
The law currently states that all appliances must be safe and that if something goes wrong the manufacturer should take action. That is not only a consumer rights issue; badly handled recalls can cause reputational and financial damage to British businesses and can pose serious public safety concerns. It is therefore disconcerting that this serious and important issue has been omitted from the Bill.

Robert Flello: While listening to my hon. Friend I recalled two recent incidents. First, I recently went into a shop from a chain that I have not been into for some time. On the counter of the customer service desk was notice of a product recall. Thankfully, it did not affect me, but I could have gone for eight months between visits and not seen that. Secondly, a product recall was put out on the radio the other day. It was from a year earlier, and not enough people had responded. My hon. Friend makes an extremely valid point.

Fiona O'Donnell: I am grateful to my hon. Friend. The new clause does cover the time it takes for the trader to respond and make the public aware. It would also place a duty on the Secretary of State to review the matter. I will raise concerns about the success of product recalls later, but I expect many members of the Committee have had experience of them. I did with a microwavable hot water bottle, which could have come in handy during our proceedings in this room. Unfortunately, it was recalled. Several months after I had bought it I walked into Boots and happened to notice the sign on the door saying that the product was dangerous and that people had been burned. I had a narrow and lucky escape.
In a reply to a parliamentary question from the hon. Member for Foyle, the Minister conceded that her Department had made no assessment of the effectiveness of product recalls. The issue has been neglected for too long, and that is why we need new clause 2. I hope that we can come together across the Committee to take the opportunity to fill that glaring gap.
“When you buy a cooker, you don’t expect it to kill.”
Those are not my words but the words of Brian Smith, whose son Richard died in November 2010, aged 30, when a Beko cooker gave out carbon monoxide. The cooker had been recalled in 2009 and could have been made safe by a simple modification, but the message never got to Richard Smith and his housemate, Kevin Branton, aged 32, who also died.
Last July Kevin’s mother Denise participated in a documentary for ITV that looked at the safety of household appliances. Denise explained that, soon after Kevin’s death, she discovered that there had been eight other deaths linked to the same type of cooker, and that there had actually been five deaths in the two months before her son’s cooker had been purchased. A sixth death in January 2009 led Beko to recall the product. I hope that hon. Members will think during our deliberations today about that family and what message we send to them about the value of their son’s life.

Robert Flello: I may have misheard my hon. Friend, so I would be grateful if she could clarify something. Did she say that there were deaths before the son purchased the cooker?

Fiona O'Donnell: I did indeed say that there had been five deaths in the two months before the son’s cooker had been purchased, yet the product was still available. People thought that they could be confident that it was safe, but it took the lives of those two young men. Those of us who are parents can only imagine how we would rage against the fact that our sons had been exposed to such a risk and that we were not aware that those five others had died.
Denise was advised not to do any press to warn the public about the cookers during the two years that she waited for an inquest into her son’s death. Denise disagreed with that, and with the inquest’s verdict of accidental death. Speaking later, she said that
“surely one or two deaths is an accident but not ten lives? With a more effective and quicker product recall system, I believe that several of these lives could have been saved.”
Those sentiments have been echoed by the Chief Fire Officers Association, which is
“very concerned about the number of faulty products in people’s homes. It is the manufacturers who have created these risks and it is their moral and legal responsibility to ensure the risks are eradicated.”
The association has also criticised the current system of handling product recalls, describing it as “unsuccessful and inadequate”—it is simply not good enough. Indeed, it has been noted that the average success rate for product recalls is between 10% and 20%—that is the issue that my hon. Friend the Member for Walthamstow raised earlier—meaning that 80% to 90% of recalls are unsuccessful. Faulty goods are not returned, and people are using them and putting their lives and possibly other people’s lives at risk.

Sheila Gilmore: Having seen some recall notices, which may be in a window or on a counter, I find that it can be hard to get a feeling about the nature of the problem. People may think, “Oh, it’s just another one of these things,” or that it is not all that important, and they may ignore the notice.

Fiona O'Donnell: My hon. Friend makes a good point about the information that is available. The notice I saw was on the door just as I walked into Boots. There was no information about my rights or whether I would be entitled to money back or compensation. There is not always time for the public to grasp such issues. Much more could be done to make people aware of just how serious the risks can be. They may not always be so grave, but carbon monoxide from a cooker is a serious health risk. One would hope that people would be warned about the ill effects that they could be feeling—headaches or nausea—so that they were aware of the urgency. It was not a simple matter of something being aesthetically unpleasant; people were using something in their homes that was putting their lives at risk.

Robert Flello: My hon. Friend mentioned the hot water bottle that she bought. As appalling as the situation with the cooker is, so is being scalded, particularly if the victim is elderly or a small child, and it can be fatal.

Fiona O'Donnell: Absolutely. Scalding can be fatal and can cause lasting health problems. My hon. Friend makes an excellent point.
The Electrical Safety Council, which has campaigned tirelessly on the issue, estimates that 1 million recalled electrical products are still in use across the country, which is a terrifying fact. I am sure that if we all look at the products we have in our homes, we may find that we have such goods. By using them we put ourselves and others at risk.
The Electrical Safety Council and organisations such as Which? and RecallUK are trying to raise consumer awareness of product recalls, but the Government should do more to place the onus on manufacturers and suppliers. Under existing legislation, consumers’ rights are asserted and addressed in respect only of faults that they know about and can identify, not of serious and risky faults that are known only to others. New clause 2 would tighten regulations to ensure that recalled electrical products do not cause unnecessary loss of life, injury or damage to property.
The Minister stated the following in her written response to the hon. Member for Foyle on 7 January:
“Liability and responsibility for unsafe products lie with the manufacturer or the importer placing them on the European market. Local authority Trading Standards services…are responsible for enforcement. They have powers to order a recall, but rarely use them.”—[Official Report, 7 January 2014; Vol. 573, c. 191W.]
In short, no Government agency is tasked with actively monitoring and policing safety recalls for white goods and electrical appliances. Manufacturers are required to inform their local Trading Standards authority of issues that pose a serious or moderate risk to health and safety. However, there is little to explain how they should communicate with consumers, how often they should do it, when they can stop communicating details of the recall and, as my hon. Friend the Member for Stoke-on-Trent South said, how quickly they should make the information available to the public.
The current rules are set out in the General Product Safety Regulations 2005, which state that a manufacturer must
“contact consumers who have purchased the product in order to inform them of the recall, where and to the extent it is practicable to do so…publish a notice in such form and such manner as is likely to bring to the attention of purchasers of the product the risk the product poses and the fact of the recall, or…make arrangements for the collection or return of the product from consumers who have purchased it or for its disposal”.
It is for individual companies to decide how and to what extent it is practicable to contact consumers. Manufacturers are given discretion over when and how they choose to deal with dangerous goods. That has led to concerns that we are balancing the need to protect the public with companies’ need to protect their brand, which may result in their failing to meet the expected standard. For example, Hotpoint took at least a year to publish a safety notice about a faulty dishwasher, and Beko was alerted to a problem with its fridge-freezers in 2008, but did not contact customers until the end of 2010. That is why proposed subsection (2) calls on the economic actor responsible for the goods—the trader—to
“take all reasonable steps to inform all persons affected, or likely to be affected…within the shortest period of time practicable.”

Andrew McDonald: My hon. Friend is making a powerful speech on this important issue. Does she agree that in her dreadful example of the cookers, the phrases “all reasonable steps” and
“shortest period of time practicable”
mean that it must be done immediately? No steps are outwith reasonable practicability if the device can kill. In those circumstances, it is imperative that the manufacturer and supplier track people down and knock on their doors to say, “You have a dangerous item in your possession.”

Fiona O'Donnell: My hon. Friend makes an excellent point. The current guidance is too subjective and can lead to different interpretations of risk. We must look at the areas that are not covered by regulations. If a car developed a fault in two months and killed five people, it is unthinkable that the manufacturer or the trader would not deal with it, but there is not the same consumer protection for white goods.

Robert Flello: My hon. Friend is being very generous with her time and making a powerful speech. My local fire service in Staffordshire is often called out to tumble dryer fires—I gather the problem is quite common. Perhaps I can attract the Minister’s attention to my question for my hon. Friend: has any work been done on cross-checking which tumble dryer fires fire services are being called out to against which models are recalled? It would be very interesting to know how many of the tumble dryers that go up in smoke and cause huge problems—if not leading to deaths—should have been recalled.

Fiona O'Donnell: My hon. Friend makes an excellent point, which I hope the Minister will address. Proposed subsections (4) and (5) of the new clause would give the Secretary of State the scope to deal with such important issues, preventing further loss of life and property and incidents of damage.
Denise Branton, the mother of the 32-year-old man who lost his life to carbon monoxide poisoning, has suggested that the Government should gather and make public information on safety incidents caused by recalled goods, together with estimates of how many such goods remain unaccounted for. That idea forms the basis of proposed subsection (4).
As set out in proposed subsection (5), the Secretary of State should periodically review the effectiveness of recall actions and the procedures in place to achieve successful recalls, with reference to the public information gathered for purposes of subsection (4). Evidence-based reviews can lead to a better understanding of what works, thereby helping to improve the success rate of recalls as well as enhance public safety. Public confidence in goods would also be boosted.
The introduction of stricter penalties for manufacturers that fail to meet their obligations could lead to improved product testing and development, as well as more efficient recall. Currently, most recalls are voluntary and do not attract fines; meanwhile, if mandatory recalls are deemed to have been carried out inadequately, manufacturers can be fined up to £5,000. That is a tiny amount compared to the turnover of large multinational companies, and it is worth noting that not one has ever been fined.
Consumer rights legislation may appear abstract and technical, but, quite simply, effective product recall can help to save lives. The case of Richard Smith and Kevin Branton is tragic but sadly not isolated. Across the UK, families have lost their property, their homes and even their loved ones as a result of faulty electrical products that have not been successfully recalled. New clause 2 would be a welcome step, showing the public, including families affected by unsuccessful product recalls, that Ministers are taking their concerns seriously.
I appeal to everyone present to support the new clause in order to send a message to those families and save lives in future.

Jennifer Willott: The Government are committed, in the Bill, to clarifying consumer law enforcers’ investigatory powers. Such powers include those to inspect and seize goods and documents.
The hon. Lady has made a powerful case and given some extremely distressing examples that highlight exactly why it is important that we ensure industry works effectively in this area. Some of the cases she referred to are harrowing and extremely upsetting. They highlight the fact that the measures in the Bill are sometimes a matter of life and death. We may sometimes belittle consumer rights matters, but some of the issues relating to the Bill are critical and incredibly important to people. The hon. Lady is right to raise them.
Part of the purpose of the Bill is to clarify enforcers’ investigatory powers for both businesses and consumer law enforcement authorities. The new clause refers to product recall, which is not covered by the Bill because there is already a body of legislation that covers product safety recalls, in particular the General Product Safety Regulations 2005.

Fiona O'Donnell: The point I made is that while there may be laws that govern that, there is no regulatory body that has responsibility for enforcing those laws when it comes to white and electrical goods.

Jennifer Willott: The hon. Lady mentioned special processes for drugs, food and certain products. The other areas—white goods and the other things she is talking about—are the responsibility of local authorities. They have responsibility for enforcing the General Product Safety Regulations, which cover the items she mentioned, and BIS co-ordinates the process. There are no gaps. There is a clear responsibility there.

Fiona O'Donnell: I really must intervene at this point. When five people could die because a faulty product had not been recalled, how can the Minister say there are no gaps?

Jennifer Willott: Because it is very clear where the responsibility lies for taking action. I do not dispute the case that the hon. Lady mentions; there are clearly issues with recalls. She has highlighted some cases where things do not seem to have happened as quickly as they should have. That does not mean that the architecture is not in place for that, and it is clear that local authorities do have that responsibility. That is laid out.

Robert Flello: I am slightly incredulous. So there are over 1 million products out there that have not been properly recalled; people are dying, and yet the system—the architecture, if you like—works. I am sorry: the hon. Lady has lost me on that one.

Jennifer Willott: The hon. Member for East Lothian asked who was responsible for recalls in a particular area. I do not understand what is so difficult for the hon. Gentleman to understand. As the hon. Lady said, specific bodies are responsible for certain parts, and the rest is the responsibility of local authorities. There are issues, which I will address later, but under the 2005 regulations local authorities have the responsibility to ensure that the enforcement takes place. Those regulations place strict duties on producers and distributors to ensure the safety of products, and the Government consider it right that the liability and responsibility for unsafe products lie with the manufacturer or the importer who places it on the European market. It is right that that is where the responsibility should lie.
Where a producer or a distributor has placed an unsafe product on the market, they are required to notify an enforcement authority, such as Trading Standards. The hon. Member for East Lothian gave a couple of examples where it appears that there has been a delay between a manufacturer’s identifying an issue and notifying the authorities. Clearly, I cannot comment on individual circumstances; I do not know the details, but the requirement is that they must immediately inform the competent authorities and then co-operate with them in removing the risk. That is what is laid out in the 2005 regulations. The competent authority includes Trading Standards and BIS. So the requirement is on them to act immediately; that is what the regulations say.

Fiona O'Donnell: As ever, the Minister is being very generous and patient in giving way. The system clearly is not working. There may be a framework, but it is inadequate. These cases are brought to me by reputable organisations such as Which? The Minister says she cannot comment on an individual case. I would like to give the Secretary of State that power, because I think it is time we had a little more of that sunlight which this Government are so fond of on the issue of safety and consumer goods.

Jennifer Willott: If the hon. Lady will bear with me, I will explain what is being done to try and improve the situation. She has raised several issues, but clearly I do not know the details of the cases that she mentioned this afternoon so I cannot comment on them. The regulations say that the manufacturer or importer must immediately inform if there is a concern. Often, it is very difficult to trace all the purchasers of the goods, and when a person buys a cooker or a toaster, they do not necessarily have to give their contact details. Many consumers are often extremely wary about providing their contact details to the manufacturer, so often the manufacturer does not have an accurate record of who has purchased a specific item. The hon. Members for Stoke-on-Trent South and for East Lothian described how they found out that their purchases had been recalled when they went back to the shop. There was no other way. They obviously had not given their contact details to the shop when they purchased the hot water bottle, for example, so there are cases where it is difficult to identify who should be contacted, and work is being done on the effectiveness of ensuring that people are aware of product recalls.

Andrew McDonald: The Minister will no doubt agree that in this day and age, people give very good information about their identity when they purchase goods. More often than not, they pay with a credit card, which is eminently traceable. In such serious cases, should the onus not be on the person who put the product on the market and placed it in someone’s home to take every step to track it down? The information is there.

Jennifer Willott: I may be wrong, but I am fairly sure that handing over credit card or contact details to the trader would be a breach of data protection. It depends entirely on the item. Some very large items have to be registered online. Cars tend to have more effective recalls, because we know who has bought a car. I have had letters saying that something was wrong—I have quite an old car—but traders know who has purchased it and where it has been. There is traceability, so they can identify where it is and recall it, but that is not case for a lot of smaller items, which are often not registered. People are often concerned that if they register their details with a company, they will be bombarded with junk mail. The percentage of people who register their items is nowhere near 100%, so it can be hard to trace them.

Mary Glindon: The Minister is referring to traceable goods, but what about imported goods such as furniture that could be faulty? There is no one to take responsibility for spotting and recalling, and the new clause would cite an organisation that would be an appropriate authority to gather information. Fire safety regulations have made a big difference, saving lives, and our British standards for furniture are very high. However, we cannot guarantee that with products that come from thousands of miles away, where the regulations do not apply.

Jennifer Willott: I will get back to the hon. Lady in a minute on the issue of imported furniture.

Stephen McPartland: I am chairman of the all-party group on furniture. I have done work on fire safety regulations and have been to see the Secretary of State on various occasions to discuss the issue. When furniture is imported into the UK, it has to comply with British fire safety regulations, which are of a higher standard than those in Europe.

Jennifer Willott: The hon. Gentleman is quite right. The importer is liable to ensure that the service complies with the UK’s regulatory framework, or the legislation could apply to the authorised representative of the manufacturer based in this country. Whoever is based in this country who has brought the item here is responsible if a concern needs to be tackled. The legislation makes it clear who on the business side is responsible for the product.
The producer or the distributor is under a duty to co-operate with the enforcer in taking action to avoid the risk posed by the product. That is laid out in the legislative framework, which is quite comprehensive. Opposition Members asked how the recall process could be made more effective to stop instances such as those raised by the hon. Member for East Lothian. We would probably all like to have the most effective recall system possible.
The hon. Member for Stoke-on-Trent South raised concerns about the number of forced recalls. The producer or the distributor will often take voluntary action to alert consumers to a safety issue and, where necessary, remove the product from sale. That is much more common than an enforced recall, because producers do not want to produce something that is dangerous to their consumers; that is not a very good way to ensure success in business. They will often voluntarily recall something. That might include issuing safety notices or initiating their own recall. If necessary, Trading Standards has the power to order a recall, but as I say, it rarely needs to do so.

Stella Creasy: The new clause relates to gathering data about the number of outstanding products. If any of us was concerned that perhaps a kettle in this very House might breach legislation—[ Interruption ]—or, indeed, a mobile phone could be dangerous to life or limb, there should be a place where one could double-check. I have to admit that there are two kettles in my constituency office, but, basically, it would quicker to put on the oven to try to boil water and there is nowhere I can check whether they are faulty. Does the Minister see merit in the new clause, in at least committing us to a process where we would gather information about outstanding products, so that there could be a place where consumers could inform themselves about products that they should take care when using?

Jennifer Willott: I will come to information sharing, but I should like first to finish my point about the legislative framework that is in place. Trading Standards can order a recall, but it has the power to prosecute traders for selling unsafe products under the General Product Safety Regulations 2005. It can take action if a trader is selling something that they are aware is unsafe.

Fiona O'Donnell: I realise that the Minister might not be able to give me this information today, but perhaps she could write to me to tell me just how many traders have been prosecuted by Trading Standards for continuing to sell goods that they know are unsafe.

Jennifer Willott: The hon. Lady predicts very well: I cannot tell her off the top my head, but I am happy to write to her with the details; that is not a problem at all.
Recalls are expensive for traders and so on. They can often be extremely complex, which is why they are often difficult to do. Manufacturers work with the enforcement authorities to tailor the action to the product given the specific circumstances or risk factors. Some of the issues the hon. Lady raised are matters of life or death whereas a kettle is perhaps slightly faulty but turns off before it boils. Clearly, the effort that needs to be made to ensure that all such items are recalled differs depending on the circumstances. Manufacturers will work with enforcement agencies to ensure that measures appropriate to the circumstances are taken. One of the reasons why it is difficult to compare the effectiveness of recall actions, as highlighted in the new clause, is that what is appropriate differs in different cases and it is difficult to compare different scenarios.
The hon. Members for Stoke-on-Trent South and for East Lothian asked how consumers are informed that a product has been recalled. The amount of effort will vary in different cases. Good practice guidance sets out how manufacturers should inform consumers about unsafe products. For example, direct mailings to those consumers whose details they know, press notices, adverts, media coverage and signs in stores can be used. Manufacturers have a suite of different options available. The guidance sets out the most appropriate steps to take in particular cases.
The Government are working with the electrical products industry, which monitors the impact of such actions to try to improve the effectiveness of recalls. Hon. Members have highlighted that those actions have varying success in terms of the proportion of products recalled. In some cases, consumers decide not to send an item back, and there is no way of forcing them to do that, so the success rate will probably never be 100%.
The industry is looking at how it can improve the recall system. The Government are supporting the efforts of the electrical products industry to monitor the impact of the different actions and identify ways to make product recalls more effective. We are working with the Association of Manufacturers of Domestic Appliances on an industry initiative to encourage the public to register their appliances. The leading appliance manufacturers have committed to facilitating product registration and using the power of their marketing programmes to help the public to understand the wisdom of registering domestic appliances. If appliances are registered with manufacturers, it is much easier for those manufacturers to contact all purchasers of an appliance if a problem arises and let them know that a recall is in place.

Fiona O'Donnell: Until the Minister explained earlier in our proceedings the benefits of registering goods, I had no idea why that was done. Nobody who has sold me goods has ever explained to me why I should register them. I always thought it was simply so that manufacturers could bombard me with marketing, which is why I never did so. Does she think that rather than just working together, it is time we took action and placed some directions on traders and manufacturers?

Jennifer Willott: I have sympathy with the hon. Lady. I am not very good at registering things either, because I am always concerned that I will be bombarded with things. There is probably work to be done, particularly via some of the consumer groups, to encourage people to register their products. The industry is working with the supply chain—including the retailers, which have an important role—and with other stakeholders such as Trading Standards, the fire brigade and consumer groups on how to encourage consumers to register their domestic appliances, which would make recalls more effective. Quite a lot of work is being done at the moment, which I hope will tackle some of the issues that she raised.
The hon. Member for Walthamstow asked about suppliers providing information to the consumers whose information they have gathered. Information on unsafe products is shared across the EU via the RAPEX system, on which alerts are posted by Trading Standards. Consumers can access that system on the Trading Standards Institute website to see which items are on the list. In addition, European legislation on the safety of electrical equipment is being revised to improve the traceability of electrical products. That revision to the directive is expected to be agreed later this year, after which the UK will have two years to transpose it into national law.
Turning to the detail of the new clause, the Government consider that it would be disproportionate to place a duty on the Secretary of State to gather evidence of recalls and provide estimates for unaccounted products.

Fiona O'Donnell: The Minister has said that that information is already gathered and dealt with by Trading Standards. Surely, the Government would simply have to pull it all together so that they had an overview. I do not see what the Minister objects to in the new clause, or what the problem is.

Jennifer Willott: The information is already publicly available through the RAPEX system. The problem is the provision of estimates for unaccounted products. The information is likely to be unreliable, particularly for older products where it is difficult to estimate and where a consumer may have transferred ownership by selling the product to another person. The information on older products is likely to be of little use to enforcement bodies or consumers. It would be disproportionate to place a duty on the Secretary of State to provide that information, which will not be of much benefit to consumers. It will be much more effective to ensure that the information is available to consumers and to focus on the work that is being done to make product recalls more effective, working with the industry, consumer groups and other stakeholders to try to identify the best ways of doing so.

Fiona O'Donnell: The Minister referred to older products. What information does she have? My understanding is that the vast majority of such goods would be new products. Perhaps if companies have taken two years to make us aware of the fault, they might be a bit older, but what is the evidence for her to be so concerned that older products are a problem?

Jennifer Willott: There are a variety of issues. For example, with my car, which was seven and a half years old, there was a recall last year. Issues may crop up later in a cycle, and it may be more difficult to track them down.
The new clause does not specify new items. What is useful for consumers is to ensure that recalls are effective, and that they have easy access to know which items have been recalled, and to ensure that traders and manufacturers can identify who had their products when a recall is necessary, to enable that process to work more quickly.

Fiona O'Donnell: I asked the Minister what evidence there was. The story about her car was interesting, but it is not the kind of evidence I was looking for. If she cannot give me that today, does she think there is a breakdown out there? We are being told that the information is not there and that it is too difficult to pull it together. Why is she concerned that there are all these old goods that we cannot track down? What is the evidence for that?

Jennifer Willott: There are a lot of cases in which we do not have ownership information. In the examples provided by the hon. Lady and the hon. Member for Stoke-on-Trent South regarding items that have been recalled, there is no way for the retailer or manufacturer to have any idea that those items had been purchased by those two individuals. One of the main problems with many recalls is that manufacturers and traders simply have no information about who purchased items. Rather than just providing estimates of how many have been affected, it is more effective to ensure that that information is shared and that people register their products, to see whether we can tackle the problem in a way that allows us to trace the goods and their owners.

Andrew McDonald: Has the Minister had the same experience as me? When I go to Comet or Currys to buy white goods, I do not know which manufacturer makes those goods—Indesit, Beko or whoever—but they have a model number. More often than not, the goods will carry a serial number. When I purchase those goods, retailers seem to demand a great deal of information from me, for example, if I ask for the goods to be delivered. A lot will be known about me. Does she feel that she is entirely correct about their not having a great deal of information about who purchased a dangerous cooker? In those circumstances, the defects would come to light quite quickly; the product is new and has an inherent flaw. The information, such as serial numbers, is in the possession of the store and the retailer.

Jennifer Willott: My understanding is that in many such cases, that information is not known to the trader or manufacturer. Certainly there are cases where individuals register their products and details, so they can be contacted. A lot of the work that is going on in the industry is to try to encourage that. As the hon. Gentleman said, that is the way forward. I know that hon. Members want to raise quite a lot of other issues, so I am keen to draw this debate to a close.

Robert Flello: Will the Minister give way?

Jennifer Willott: Very briefly.

Robert Flello: I am grateful; the Minister has been generous.
The Minister referred to Trading Standards and the website from which consumers may get the information. I must say that that was news to me. I have called up the website. The first item on there is a kettle, which again could be dangerous. Some items on there can be shock hazards—it is quite a long list. Has the Minister ever looked at the website? If she has not, does she not think—to come back to the point made by my hon. Friend the Member for East Lothian—that whichever party is in government, there is a real onus on Government to educate the public about a quick, easy and safe way to find that information out? Rather than it being a case of pot luck, if a consumer happens to go back to their local superstore after eight months, sees a sign when they push the door open and thinks to themselves, “Hang on, I’ve got one of those and they are dangerous,” is there not an onus on Government in that regard?

Jennifer Willott: A lot of these issues are being tackled across the industry, which, as I said earlier, is working with stakeholders such as the fire brigade and consumer groups. Consumer groups have an important role in making sure that people know how to access that information. Sharing information—and that information going both ways round—is an important element. The cases that hon. Members have raised are important, but I hope that I have been able to reassure people this afternoon.
The hon. Member for East Lothian asked what evidence there is about old goods that cannot be tracked. In some recent high-profile examples in the electrical products industry, the products involved—for example, dishwashers —were around seven to 10 years old, so there are instances of old products that may well have changed hands.
I hope that I have been able to reassure hon. Members that a lot of the issues that the hon. Lady has raised are covered by other areas of work that is being done by the Government or by industry and that the relevant information is publicly available. With that, I ask her to withdraw her new clause.

Fiona O'Donnell: I really do not feel confident about what the Minister has said. It all feels a little bit laissez-faire and woolly. People may be working together, but the fact is that there are serious problems with the present system and I am really disappointed that the Minister has not used the opportunity the Bill offers to get to grips with that issue. Companies that run loyalty cards are getting really good at targeting us and communicating with us, and I would like some of that energy to go into keeping people safe. Different sectors would respond in terms of their own research and development and product testing.
I am afraid that I feel a duty of care to my constituents on the thousands of faulty goods in homes across the UK, and so I have to press the matter to a vote.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived.

New Clause 3  - Right to supply unique goods

‘(1) A trader offering unique goods for sale must provide the consumer with information to enable the consumer to directly identify the unique qualities of the good they are purchasing.
(2) Where a consumer cannot confirm the goods are unique in person, the consumer has the right to reject these goods at any point prior to consumption.
(3) Where the goods are for use in relation to an event of national significance the Secretary of State for Culture, Media and Sport shall reserve the right to designate further restrictions and conditions on the sale and resale of these goods in relation to their unique qualities.
(4) For the purposes of this section unique goods are defined as having distinct characteristics which would affect—
(a) the enjoyment of the goods by the consumer;
(b) the use of the goods by the consumer; or
(c) the inherent value of the goods in question.
(5) For the purpose of this section an event of national significance is one which is designated for this purpose as such by the Secretary of State for Culture, Media and Sport under the provisions of section 299 (categorisation of listed events) of the Communications Act 2003.’.—(Stella Creasy.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived.

New Clause 5  - Ombudsman Services

‘(1) The Secretary of State shall be responsible for the licensing of ombudsman services and delegating powers to competent authorities on behalf of the Government to provide effective access to alternative dispute resolution processes as set out in the European Directive 2013/11/EU on alternative dispute resolution.
(2) Within three months of Royal Assent of this Act the Secretary of State shall publish guidance which forms the basis of the legal accreditation of the term ombudsman which covers the following matters—
(a) the powers that any ombudsman may have in relation to the industry over which they have supervision including any capacity to secure compensation for consumers;
(b) the relationship and status of the traders’ dispute resolution procedures on the conduct of any investigation by the ombudsman authority;
(c) powers to direct traders to comply with their investigatory proceedings;
(d) powers to enforce breaches of regulations in individual cases;
(e) powers to make recommendations to regulators regarding conduct within the industry they oversee which may be responsible for consumer detriment;
(f) the nature of their independence and how this will be protected in accordance with directive 2013/11/EU on alternative dispute resolution;
(g) the status that any advice that they may issue will have for both consumer and trader including within legal proceedings;
(h) the duty for all ombudsman services to report to Parliament on the nature and persistence of any complaints they receive and the outcome of any resolution process;
(i) the duty for all ombudsman services to make recommendations to Parliament on measures to address consumer detriment within the industry for which they have oversight;
(j) the duty on ombudsman services to provide formal consumer representation within their governance structures;
(k) how competent authorities will ensure that there is no overlap, duplication or gaps in the provision of ombudsman services to consumers;
(l) the completion of dispute resolution procedures within 90 days of the complaint being received;
(m) the limits to any costs a consumer would incur in participating in an ADR process overseen by the ombudsman.
(3) Any organisation unlicensed by the Secretary of State shall not be considered an ombudsman.
(4) The Secretary of State will also set out the penalties for the misuse of the term ombudsman or the powers of ombudsman services.
(5) The Secretary of State shall be responsible for ensuring consumers have a single point of contact to identify the relevant ombudsman services.’.—(Stella Creasy.)

Brought up, and read the First time.

Stella Creasy: I beg to move, That the clause be read a Second time.
The Opposition’s subtitle for the new clause is “The elephant in the room”, because it is about alternative dispute resolution—

Stephen Doughty: And the panda.

Stella Creasy: We had pandas. One might not want to call this place a zoo, but we certainly had a pregnant panda in the implementation group. Eagle-eyed Members —[Hon. Members: “Oh!”] Oh, come on. Eagle-eyed Members will have seen the new clause that refers to the implementation group, but new clause 5 is the elephant in the room because it is about the implementation of the European directive on alternative dispute resolution. It is welcome that the Government appear to have followed our lead by publishing today their consultation on how to bring in the directive.
For members of the Committee who are not entirely familiar with it, the directive has to be applied by next year; it imposes a series of requirements on Governments regarding the provision of dispute resolution services for all consumers across all sectors. The Government have now had two years to transpose it into law, so the Opposition are faced with a mystery: we cannot fathom why the cage is empty. My hon. Friend the Member for Stoke-on-Trent South is looking at me. I promise to stop there and not to start quoting Simon and Garfunkel. Given the Minister’s earlier remarks about the importance of alternative dispute resolution processes to the exercise of consumer rights, we cannot understand why the Bill makes no mention of the European directive and, indeed, is not part of its implementation.
We tabled the new clause to assist the Minister, just as earlier this morning we discussed how to look at micro-actions. We are concerned and having speed-read the consultation over lunchtime—I apologise if my stomach starts to growl, because I did not eat as much as I would have liked, so that I had time to read the consultation—[Interruption.] I was indeed vexed by the requirement to do this. In the consultation document, the Government make some important points on alternative dispute resolution, calling even more into question their decision not to match up the requirements of the directive and the Bill.
In particular, the Government’s impact assessment accepts that currently alternative dispute resolution in this country does not meet the European requirements: it does not provide independent alternative dispute resolution across all sectors within 90 days or a process by which consumers can be informed whether their appeal has been successful. We all understand how important alternative dispute resolution is to both parties—after all, the idea of having to take someone to court can be overwhelming. An alternative, simple process whereby someone adjudicates whether a complaint is fair and compensation is owed as a result—that compensation may take myriad forms—is even more important. We know that ADR is also good for businesses, because it helps to reduce the possibility of legal action, thus improving customer satisfaction.
None of us expects to buy everything without any problem at all; we all recognise that things can go wrong. During its machinations, the Committee has heard many examples of problems occurring—cases where goods, services and, indeed, digital content have not been satisfactory or fit for purpose. These are simple rules and we welcome the fact that the Bill would introduce them, but we recognise that there are times when consumers will dispute the way in which services, goods and digital content have been provided but will be unable to find resolution internally with the business; an alternative dispute resolution system is important because it avoids the prospect of going to court. Businesses have also found that to be true. That is why it matters that we get these provisions right.
The legal ombudsman found after reviewing the previous 10 years of its work that the net benefit to industry from good complaints handing could range from £6 million to £9 million a year, and that that could improve the profitability of law firms as a result. Good ADR helps businesses to save money, helps to improve customer confidence and helps to resolve matters quickly. As we know, a lot of people’s complaints are not resolved quickly—what happens when there is not good ADR. Only 46% of businesses were able to resolve more than 90% of their complaints, while providing explanations to their customers. This is where ADR comes into play: the customer has been back to the shop, called up the service provider and said, “This isn’t working. It’s not right. I want my money back, or I want the repeat service performed I’m entitled to,” but the company has said, “Well, sorry we disagree.”
This is the spirit of the EU directive, and I think we would all agree with that spirit. If there is a measure that can save money and improve the profitability of companies and the experience of consumers, so that they are more likely to consume, it must be in the interest of our economy, our businesses and our consumers. That is why we were surprised that the Government did not choose to use the Bill, which introduces the rights on which an ADR process would adjudicate, to make sure that that parallel process of remedy and redress is part of our thinking.
We were confused and concerned when the Government said that they did not think legislation was necessarily required, so we are interested to see that in their consultation the Government now accept that there could be a case for primary legislation on ADR, that they will seek to use the 1972 Act, I believe, to introduce proposals and that there will be matters that the House will seek to consider. I do not know whether we, as Members of Parliament, have an opportunity to use alternative dispute resolution with the Government about their taking up our time twice with the question of redress, but I think we could make a case that the Bill, if it does not mesh into that ADR process, is not necessarily fit for purpose or satisfactory, and we might want 30 days to return it. We might want to challenge several aspects of the Bill, but the fact that we will not have the opportunity to consider these matters together is a concern for us.
We are concerned because, at present, there is no fit-for-purpose ADR landscape in this country, as the Government acknowledge in the consultation. There are 70 different ombudsman schemes in this country, but they are of variable quality. The word “ombudsman” does not necessarily guarantee a set of standards. Eagle-eyed Members will have seen that the new clause is designed to deal first and foremost with that concern. What does it mean to seek succour from an ADR process? Although what an ombudsman does is clear in principle, it is confused in practice, because a number of different ombudsmen have been set up along the way in the UK, with varying capabilities and powers. Some are statutory—for example, the housing ombudsman, which I am sure many of us have dealt with in our casework—and others are voluntary or, I dare say, not independent bodies at all but simply cover for a trade association.
The Furniture Industry Research Association is the only profit-making ombudsman service in the UK, but many of us will know of the concerns. I am sure that the hon. Member for Stevenage, with his all-party group hat on, will want to talk about the quality of furniture complaints resolution. Certainly, that organisation does not stand up under same scrutiny as other ombudsman services—ones that do have independent actors within them and do seem to act more in the consumer interest. The fact that the Office of Fair Trading would not accept FIRA self-certification speaks to the concerns about whether it is truly an independent ombudsman service. It therefore seems right to us to ask what the Government are doing to make sure that consumers can have confidence in ombudsmen.
The European directive must be enacted by next year, so there is not a huge amount of time, especially parliamentary time. We are using the new clause to ask how the directive fits in with the Bill and to offer suggestions how that could be done. New clause 5 is an attempt to do precisely that and to look at what matters when it comes to ombudsmen and how that matches with the directive. It deals with their independence and their ability to deal with cases within 90 days and to make recommendations that have meaning. It is no good someone going to an ombudsman whose decision is in their favour if it has little impact. To the consumer, that feels like a process of attrition rather than resolution. When we come to discuss the role of ombudsmen and alternative dispute resolution in the public sector, many of us will be able to think of bodies, as I can in health, where it feels that such procedures have been put in place to create a process of attrition so that, eventually, a user will give up complaining, rather than getting the service they require.
I want to give the Committee the example of a sad story that was brought to me. The financial ombudsman had been involved in the case of a pensioner couple who had been given very bad advice about taking out a second mortgage on their property, so that they could renovate it and realise their capital. The development fell into serious problems at the time of the financial crash, but when the loan company refused to let them exit the scheme, they were forced to take out a further mortgage, incurring further debt. The trust in question increased interest on the loan and subsequently required them to use their own builders to rebuild the property. The financial ombudsman’s findings recognised that there had been detriment.
The lender continued to chase the couple for money and the ombudsman’s case was reviewed again. The local MP got involved, which is perhaps another form of alternative dispute resolution. The family has raised a concern about the conduct of the financial ombudsmen because the review has been suspended but further breaches of regulation have been identified. That shows the mess that can result from using ombudsman services if they are not done to a particular standard or if the consumer does not have confidence in respect of the issues that the ombudsman can deal with and that the ombudsman can punish breaches of regulation.
The new clause speaks to such situations and seeks to ensure that every ombudsman is a gold-standard ombudsman. Indeed, the Government’s impact assessment talks about how the legislation that they intend to introduce could be gold-plated. How we can have confidence in ombudsmen is an important question. The fact that that is not being considered alongside the regulations that the Government propose in this legislation is a problem.
Let me give an example of where the problem might occur from the business perspective. The impact assessment assumes that, when the system comes in, it will take one hour to train a business’s staff on alternative dispute resolution and to make sure that in every sector staff know to whom they should refer customers. That does not take into account any training that might need to be undertaken on the rights in the Bill. The Government have set great store by the idea that the Bill will introduce simplified consumer rights.
We will come on to a new clause about the implementation group and all the different issues that it will look at. Surely, however, if part of that is about access to redress and part is about people’s right to complain and whom they would go to should there be a problem, the group should also look at alternative dispute resolution. Given the already lengthy list that the implementation group has to deal with, the idea that any of this information can be imparted in just one hour and that ADR is not part of the process seems to us to be misplaced.
The Government’s consultation goes through several different proposals for dealing with complaints and, given the acknowledgment that the ADR landscape in this country does not match the standard in the EU directive, how to achieve that standard. That goes from the minimal option, in which the Government create a back-stop dispute resolution process of last resort, to radical reform of the ombudsman landscape, including having a single ombudsman, because the EU directive requires a single point of entry into the complaints process. Those are all radical suggestions about how people might seek redress, but without reference to the Consumer Rights Bill, surely they make no sense. Equally, the Bill makes no sense without reference to the powers of redress.
As we discussed in previous sittings, one of the worrying things about the consultation is that it looks at whether consumers should pay a fee, or go through the process of being asked to pay a fee, to complain. Members will be concerned about the possibility of some consumers not being able to access alternative dispute resolution, given the importance of an ADR system in ensuring consumers’ rights and encouraging businesses to co-operate.
If there is a narrowing of the process to those who can afford to pay, how does that fit in with the rights in the Bill—rights that, up until now, we all thought were for every consumer? The Government talk in the proposals about resolving the issue of whether we could have competing ADR systems. Members will know of my concern about the estate agent industry. There are two different ombudsman services for property management. The consultation talks about that being good for businesses, because, as they can decide between two competing schemes, that will be good for quality. I am not so sure that it is good for consumers. If the consumer seeks redress under one system, the business may threaten the ombudsman with going to the other ombudsman if it finds in the consumer’s favour. In that case, the ombudsman has a clear incentive to keep hold of the business, rather than protect the interest of the consumer.
There are all sorts of questions about how this measure will interact with consumer rights. That is the elephant in the room. The Bill should have been informed and influenced by the way in which the EU directive is brought forward. The Bill has no particular timetable, but the EU directive does. If the Government want to tell us that they could not consult in time on the EU directive, why did they not delay the Bill so that it could have been informed by that? Why have they chosen to double the Department’s work load by separating these two processes? That does not give clarity to consumers on who will act in their interest, or give clarity on how businesses can expect any of the requirements of the legislation to feed through into alternative dispute resolution.
There is clearly a problem with our ombudsman landscape. The fact that that is recognised only shows further that we need to do more to make it work for consumers, and not simply for businesses. We do not want the least worst option that allows us to adhere to the EU directive that we signed up to; we want an ombudsman service that matches the Bill’s standards and ambitions as regards consumer rights.
We tabled the new clause to try to get the Government to look at how we can deal with issues set out by the EU directive in a reasonable time scale. We are thinking particularly about the licensing of ombudsmen, so that when people see the word ombudsman, they know what it means; standardising the powers of redress that ombudsmen offer, including compensation or requiring repeat performances; and how this fits in with the EU directive, in terms of 90 days and single-practice traders. We do not think that the Bill alone will give consumers adequate protection. With a strong and effective ADR system, however, consumers in Britain will be better off. We therefore think it is right to bring the two processes together.
If the Minister is not prepared to accept our new clause, she needs to set out the time scale for the consultation, which will finish in June. Also, given that she accepts and makes the case for primary legislation on ADR in the consultation document, how will she ensure that that occurs in a time scale that does not undermine the Bill, hinder its progress, or delay the operation? There must be no incentive to bring in the least worst option owing to the shortness of time because the Government chose not to use the Bill as a legislative vehicle. We need to get together the right kind of ADR landscape.
I would welcome the Minister’s comments on how she sees the ADR consultation being implemented, and not simply on the consultation taking place. All of us who were frustrated to see the separation of these two important issues need to have confidence that the Government have a timetable not only for a consultation, but for an implementation that makes sense for the Bill. The Opposition will reserve the right to come back on how the Bill may need to be amended to reflect whatever decision the Government make on the ADR system. If the Government choose to go for the least worst, minimal option, which they say carries a number of substantial risks of consumer detriment in their consultation document, all of us will be the poorer for it. I look forward to the Minister’s comments on the EU directive and her explanation as to why, given that the Government have bought forward the consultation now, the Bill and the EU directive could not have been married together to give a completeness of picture. What are her plans on ensuring that we get the kind of ADR system in this country that we all know our consumers and constituents need and deserve?

Jennifer Willott: As I have mentioned a number of times during the passage of the Bill, the Government are very supportive of alternative dispute resolution. It provides a much more accessible route for consumers than taking a case to court, and we want to encourage it. Consumers are often deterred from seeking redress by the prospect of having to navigate the legal system, and we want to make it easier for people to get the redress to which they are entitled. While I see better access to ADR as complementary to the Bill, I would not want to prejudice the outcome of the consultation on the implementation of the ADR directive by amending the Bill. It is important that we consult fully and take into account the views that we get back.
The ADR directive contains many provisions, and the new clause only partially covers them; the directive is broader. Additionally, the implementation process for the new directive gives us the opportunity to look at how effective the UK’s current ADR landscape is and what improvements we can bring. However, we cannot determine how we intend to implement the ADR directive in detail until we formally consult fully on the matter and take people’s views into account.
As the hon. Member for Walthamstow has mentioned, we published our consultation on implementing the directive today, and I thank her for giving the Committee the highlights of it. I therefore do not feel the need to do the same. I have sent members of the Committee copies of the consultation document, because the issue has been raised a number of times during our debate. I am sure that members of the Committee will have views, and I encourage people to respond to the consultation if they feel so moved.
The consultation sets out our proposals for ensuring wide coverage of ADR and how we intend to implement the requirements that ADR bodies will have to meet. We are also using the consultation to call for evidence on possible longer-term reform of the ADR landscape. We are seeking views on whether broader simplification is necessary and feasible, and are looking for further evidence to weigh up the costs and benefits of that. Following the consultation, we will make detailed regulations to transpose the ADR directive in spring 2015, so it is not appropriate to introduce the new clause into the Bill.
The hon. Lady asked whether there was a need for primary legislation or regulation. She seemed to suggest that I have not mentioned the need for primary legislation before, but I have made it extremely clear. For example, when I gave evidence to the Committee in our second sitting, I said:
“A number of the ways that we could ensure that ADR is available across the market do not need legislation. Some of the options can be done through regulation and so on. Some would require legislation.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 64, Q114.]
It is clear that a range of different options are available, all of which we are consulting on through the document published today. The hon. Lady asked how we would implement the directive through legislation. We will use regulations made under the European Communities Act 1972 to implement it. We need to consult in detail before we bring forward regulations to implement the chosen option. We have started that process, and that is the route we will be using.
The Government have brought forward wide-ranging and fundamental reform of the competition and consumer institutional landscape and of the framework of consumer legislation, as well as other reforms to ensure confident consumers. We have discussed that on many occasions during the Bill’s passage. Those reforms all interrelate and form part of a stronger, overarching framework, but not all of them—this includes the legislative reforms—have been, or should be, taken forward in the same Bill at the same time.
It has become clear during our discussions in Committee that other regulations and legislation fit together with the Bill. However, by consulting thoroughly, we are ensuring that our proposals to implement the ADR directive will complement the provisions of the Bill.
The hon. Lady asked whether consumers should pay a fee for access to ADR. The directive requires ADR to be free for consumers, or to cost a nominal amount, and currently the majority of schemes are free to consumers. She also asked about the licensing ombudsman. We will install a competent authority who is responsible for certifying and monitoring a list of approved ADR bodies. Our regulations for implementing the directive will set out the legal requirements that every certified ADR will have to meet, and the competent authority will be responsible for ensuring that certified ADR bodies continue to meet their legal requirements. An ADR body that does not meet the requirements will be removed from the list of certified bodies and be replaced by another certified ADR body. In effect, the competent authority will be running a licensing regime for certified ADR bodies. That is the process we will follow.
The final issue that the hon. Lady raised was about ensuring that a redress scheme had teeth, and that traders complied with rulings. Most ADR schemes work on the basis that a settlement is binding on the trader if the consumer accepts the settlement proposed by the ADR body. Compliance with decisions is not generally an issue. In isolated cases when a business has refused to comply with a decision, depending on the circumstances, either a relevant regulator will take enforcement action, or sanctions can be imposed by a relevant trade association. There is a way of ensuring that traders comply with rulings.
I hope that hon. Members will enjoy reading the consultation that came out today, and I look forward to seeing any responses that members of the Committee may wish to make to the consultation. I also hope that I have made clear why the Government believe that now is not an appropriate time to put this in the Bill, and that it would be jumping the gun. It is more important to ensure that we consult broadly, make the right decision and take account of the views of consumer organisations and a wide range of stakeholders before deciding on this matter. I hope that the hon. Lady will withdraw her new clause.

Stella Creasy: I thank the Minister for her answer, but she did not deal with the elephant in the room. Given the timetable set by Europe for the implementation of this legislation, and given that the directive will marry with the Bill, I call to the Committee’s attention paragraph 87 of the consultation document, which says that an important aim of reforming the ADR system is to complement the improvements of the Consumer Rights Bill. The document explicitly links the two, so why has the Bill been introduced if a separate process is to be undertaken for the EU directive? This is not about whether the Minister should consult widely on the EU directive, but whether we have brought forward legislation that inevitably should be informed by what is decided about implementation of the EU directive. Yet the two are not working together.
The Minister said that she is clear that legislation will be required, but the reverse could be read from her comments on Tuesday 11 February when she said:
“I said it would not necessarily require legislation…Some of the options that we are looking at would not require primary legislation; they can be done through other routes.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 65, Q116.]
I accepted that in good faith, and that we were not looking at the possibility of primary legislation, so it made sense for this not to be part of the brief. For clarity, I will read out what she said:
“A number of the ways that we could ensure that ADR is available across the market do not need legislation.”––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 64, Q114.]
That is ADR across the market, which is a sweeping statement, but we accepted the Minister’s point in good faith.

Jennifer Willott: To be complete about this, what the hon. Lady has not read out is the next sentence, which was that some would require legislation.

Stella Creasy: I am pointing out that the Minister was very clear that legislation would not necessarily be required, so her answers made sense when we queried the point. If the Minister wants to go into the issue, we can talk about the fact that we raised the point that the Government had not decided to include the ADR directive in the legislation, and we asked why. When the Minister gave an assurance that there were some methods that would not require primary legislation, we presumed that it was the Government’s intention to use those.
It is clear from the consultation that primary legislation is back on the table, and, frankly, that is probably welcome. [Interruption.] The Minister shakes her head. She needs to ask herself whether she was clear with the Committee as to why, if she was going to rule out legislation in those hearings, she subsequently did not.

Jennifer Willott: I specifically did not rule out legislation.

Stella Creasy: I will happily give way to the Minister if she wants to say why she clearly said that ADR could be delivered across the market without primary legislation. She did say that, on the record, on Tuesday 11 March.

Jennifer Willott: Every time I have spoken about this—I do not intend to intervene again—I have made it clear that we are consulting on a range of different options, some of which are filling the gaps and some of which are longer term ones, and we are asking for evidence on the costs and benefits of both. The hon. Lady says that she has read the consultation document. As I made extremely clear—and I have done every time I have said this—there are a range of options: some do not require legislation, some require regulations and some require legislation. We are consulting on a broad range of alternatives, and the methods of implementing them are different depending on the options.

Stella Creasy: I thank the Minister for her answer. In genuine good faith, we believed that the Government were not going to look for primary legislation on the basis of her comments. She may wish to reflect on whether she was sufficiently clear and precise about the possibility that there would be primary legislation. Either way, the timetable that she has set out this afternoon, whereby implementation and primary legislation could be brought forward in spring 2015, is perilously close to a general election that we all know is coming, and therefore risks the possibility that legislation will be rushed forward to avoid the wash-up, or will be affected by the general election.
I simply go back to the point that the new clause seeks to make. First and foremost, we welcome the idea of licensing ombudsmen, so that people can have confidence in the concept. We are concerned that the Department is looking at sanctions by trade associations, which, having dealt with them, I know are not very good at sanctioning their members, with good cause. After all, they rely on them for income, so to do so does not make a strong business case. Above all, the timetabling of this legislation against the timetable of the introduction of the directive is a cause for concern.

Robert Flello: Will my hon. Friend put on the record when the European directive was known about, so that I can be clear whether the Government could have brought forward this consultation to run it in parallel with the pre-legislative scrutiny, so that the ADR could be part of the Bill? Or have the Government just delayed and delayed until the last possible minute, and are now bringing forward the consultation after the legislative horse has bolted, to continue the animal theme? When was the European directive known about by the Government, at which point they could have set the consultation running, rather than having to trunk it through at the last minute?

Stella Creasy: I can assist my hon. Friend on the menagerie that is the different pieces of legislation we are being asked to consider. The directive was introduced and ratified in 2011. The Government have had two years to put this into practice. It is not that this has suddenly come upon them. The issue could have been resolved amicably. It could have been part of the process. All EU member states adopted the measure on 22 April 2013. It has been coming for some considerable time. We recognise that the consumer rights legislation has been in gestation for a number of years as well. Surely matching the two together should not have been beyond the realm of possibility. It has not occurred, therefore we will all be conscious that the Consumer Rights Bill is only half the story.

Jennifer Willott: To respond more clearly to the question of the hon. Member for Stoke-on-Trent South, the directive appeared in draft in November 2011. Clearly, the Government cannot consult on a draft directive. It was agreed in July 2013, which is why we have two years to implement it—by July 2015. Since the directive was agreed we have been in detailed discussions with many of the stakeholders to try to ensure that we are consulting on the right way forward. We have also discussed the interpretation of some of the directive’s provisions with the European Commission and other member states. That will need to be taken into account before we launch the consultation. The hon. Lady has highlighted that this is an extremely important issue and it important that we get it right.

Stella Creasy: The Minister is telling us that the Government have known for some time that this directive needed to be implemented. They have been talking to people about it for some time. Indeed, they have informally consulted and are now formally consulting on the issues. One wonders whether, at any point in that process, anybody mentioned the Consumer Rights Bill and asked how the two might fit together. That is simply the point we are making with the proposed new clause. Rather than duplicate work for themselves, it would have been better for the Government to bring all this together. Because that has not happened, consumers will be quizzical about how their rights can be enacted, because after all, ADR is part of that.
We have made our point that such a measure—certainly, the enabling powers—could have been introduced into the legislation, so that when the consultation had taken place and we knew we were getting not the lowest but the best form of ADR, we could have been confident that it would be ready in time for July 2015 and that, whatever events might befall us—a general election or other acts of God—it would not be delayed. As it is, we have no idea. I am happy not to press the new clause to a vote, but we want to put on record our concerns about the management of this legislation and the EU directive implementation process, which seems a bit of a dog’s breakfast.

Clause, by leave, withdrawn.

New Clause 6  - Report on work of Implementation Group

‘On commencement, the Secretary of State will report to Parliament on the work of the Implementation Group on the work to ensure consumers and businesses are adequately informed of the changes in the law by this Act, especially with regard to the key rights at the point of sale.’.—(Stella Creasy.)

Brought up, and read the First time.

Stella Creasy: I beg to move, That the clause be read a Second time.
We now come to the panda clause. The panda is not just having twins; having listened carefully over the course of our deliberations, it seems that the implementation group is taking on the world.

Sheila Gilmore: I am sure my hon. Friend will be disappointed to learn that the famous pandas brought to Edinburgh zoo have failed so far to produce any baby pandas. I hope that will not be true of the implementation group.

Stella Creasy: I am indeed aware of that, having been to Edinburgh zoo six weeks ago to see the wonderful pandas—without babies. I took my niece and nephew but we did not ask for our money back: we did not know what dispute resolution process there would be for the lack of a baby panda to inspire the children.
However, we are conscious that throughout the entire process the Minister has sought to assure us of the work the implementation group will do. She has highlighted the group’s role a number of times when answering many of the questions that we have raised. I took the liberty of working through the various issues the implementation group will look at. For example, it will look at point-of-sale information. The Minister said it will identify the best way to communicate and teach people about their rights. It will look at a range of ways to ensure that businesses and consumers know what the law is regarding the point-of-sale questions we asked.
Secondly, the implementation group will look at statutory rights, what they mean and how people will be told about them. It will also identify clear, understandable wording—not just how to tell people about their rights, but the words used to describe them. We heard subsequently that the implementation group is looking at the work to be tested on consumers, and how they understand information. Perhaps it is using some consumers as lab rats.

Robert Flello: Guinea pigs.

Stella Creasy: Guinea pigs, indeed. We heard that the implementation group will also look at the point of redress. We looked at point of sale and the information one might get when buying a good or service. The implementation group is answering questions about the information given when someone complains about a good, service or digital content.
We also heard this morning that the implementation group will look at the guidance given to Trading Standards. I go back to the evidence that Trading Standards is now charging businesses for its services and for providing advice. The question of what impact that might have could be one for the implementation group, given what the Minister said this morning.
We also heard that the implementation group was looking at how guidance will be drafted for a wide range of organisations. Clearly, the implementation group is not simply an add-on to this legislation; it is absolutely integral to the way it will work.
The new clause therefore seeks to understand when the panda in Edinburgh zoo will come to fruition. After all, if this implementation group is to take on so many of the issues that we have raised in this Committee and have understandable concerns about, we must know when it will give birth and when this information will be made available to consumers and businesses; when it will make some of those decisions; when it will overcome the concern that consumers must not have too much information because it would frighten them; and when it will address the question whether Trading Standards should be given guidance on particular issues, as we heard this morning.
The new clause should not be particularly contentious. Surely, it is about the implementation of this legislation. It just sets out that the Secretary of State will report to Parliament on the work of the implementation group. We have heard about its workload, but we also think its work should be covered and that we should know when it will be launched and how people will be adequately informed about the information they require, especially on the issue of point of sale. All of us were concerned above all about the concept of “buyer beware”. It needs to be an informed “buyer beware”, and the point of sale is the most important point at which to make sure that people have adequate information.

Robert Flello: The new clause is very gentle on what the Secretary of State needs to do. It does not hound the Secretary of State. Colleagues on the Government Benches should leap at it like a hart.

Stella Creasy: I can only agree with my hon. Friend, and given Thursday’s events, we would not seek to badger the Government on these matters. At the risk of flogging a dead horse, we simply want to know when we will hear from the implementation group. After all, it has been the answer to so many of our queries, and I do not think it unreasonable for us to ask when the Government intend this group to report. It would also be helpful if the Minister clarified who the members of the group are, the range and level of the issues it will deal with, and if there is anything it is looking at that she has not yet told us about. Obviously, we know it has a substantial workload.

Stephen Doughty: On a practical note, does my hon. Friend agree that we perhaps need to see that the implementation group reports digitally, via a website, using a good app, to make sure that this information is as widely available as possible? I would certainly be interested to know whether the Minister feels that that would be a good way to get the information out.

Stella Creasy: I agree. After all, we have been told that it will identify the best way to communicate people’s rights and to provide information to businesses about consumer rights. It will define what is meant by “your statutory rights are not affected”, it will publish guidance on new and existing rights for consumers and it will test consumers’ understanding of the way information is presented to them. The least we can do is have an app for that. My hon. Friend has made a fair point.

Robert Flello: My hon. Friend has switched on a light in my mind on that issue. Is the implementation group going to meet in private or in public? Will we be aware that it is meeting at all?

Stella Creasy: We only know that it is meeting because it has been the answer to all our queries in many of the amendments we have tabled and points we have raised. That is why we have tabled the new clause: to try to get some succour regarding when we will hear back about all the wonderful work that is going on. If the Minister could set out the process for the implementation group reporting back and we could therefore understand its time scale, that would be incredibly helpful. I know that Government members of the Committee are on the edge of their seats waiting to find out, because they too have been enthralled by this mysterious implementation group and all the good work it is doing. I happily look forward to the Minister’s answer.

Jennifer Willott: As the hon. Lady said, we have discussed the work of the implementation group a number of times. I think that members on both sides of the Committee are united in recognising how essential it is that consumers and businesses be better informed about their consumer rights. For example, a survey of consumers conducted last year by uSwitch found that almost half of those surveyed had a weak grasp of their rights; and a 2012 business perception survey found that only just over half of businesses felt informed about consumer law, so the levels are worryingly low.
That is why we have put the group together: so that it can work with us on a co-ordinated approach to content, communication channels and timing, and examine those different issues. Its role is to help us to reach consumers and businesses in the most effective way possible. We want businesses to feel confident that they understand what the law requires them to do, and consumers to feel confident in asserting their rights. It is important that both sides have a good understanding of the legal position.
As the hon. Lady highlighted, the group is looking at a number of issues, including the most effective channels and the most effective messages to deliver information to consumers, their advisers, traders and enforcers, because we need to understand how and when consumers and businesses want to learn about consumer rights. Is there a basic level of knowledge that every consumer should expect to have, and if so how can we best get that knowledge across? Opposition Members have rightly identified a number of possible opportunities to provide that basic level of knowledge, and now the group needs to assess the most effective approach.
The hon. Lady asked who the members of the implementation group are. The answer is that they are the British Independent Retailers Association; the British Retail Consortium; Citizens Advice; Interactive Media in Retail Group; MoneySavingExpert; Ofcom; the Office of Fair Trading; PhonepayPlus; Resolver; the Association for UK Interactive Entertainment; the Trading Standards Institute; and Which?. Those are the stakeholders involved in the implementation group.
A number of innovative solutions are being developed to examine how information can be shared with businesses and, in particular, consumers. For example, we are looking at consumers being able to access tailored advice on how to complain from their mobile phones, which would be a positive way forward. The group has a wide range of experience to offer on what consumers are looking for, and I want to ensure that we are using all the different channels to their full potential.
There are significant new rights in the Bill to explain to both consumers and businesses, and we committed in the Government’s response to the Business, Innovation and Skills Committee following pre-legislative scrutiny to producing guidance in a number of areas. The group is also advising on where guidance is needed.
We will publish our final plans; as I am confirming that point here in Committee, it is not necessary or appropriate to put it in the Bill. Also, we may report well before commencement, so that the processes can be put in place before the Bill is passed. That is why it would be unhelpful to introduce a statutory requirement to report at a later stage—it may be more appropriate for the group to report much earlier. Regarding timing, because businesses need to be prepared for when the changes come in, the implementation group has to have done its work at an earlier stage, to ensure that businesses are ready ahead of commencement.
I hope that I have reassured hon. Members that we take the work of the implementation group seriously and that we will publish the plans, but within an earlier time frame than set out in the new clause. I therefore hope that the hon. Lady feels able to withdraw it.

Stella Creasy: I thank the Minister for that response. I do not seek to out-fox her, but it would be helpful if she could provide a little more clarity. For example, how often has the group met? How often does it intend to meet? She talked about planning to publish prior to commencement. Does she have a draft timetable for the implementation group and its work? After all, getting together people from all the organisations that she mentioned will be like herding cats. There must surely be some draft timetable for the process that we could be made aware of, even if it is only provisional.
It would also be useful if the Minister could clarify whether the implementation group is looking at the issue of charging for consumer advice, because that is a serious issue for all of us. Let me give some examples. Northamptonshire county council Trading Standards is charging £58.54 an hour for advice to businesses on compliance; Surrey county council offers one hour of free business advice, and thereafter it charges an hourly rate for any additional inquiries; and Milton Keynes council is charging for a business one-stop service, charging £75 for registration and the first hour of service, and thereafter charging £56.63 an hour for advice to businesses.
I am sure that the Minister will say, “Well, those are businesses, they are not consumers.” However, given that the Government are consulting on possibly including businesses as consumers, is the implementation group considering what might be done on charging consumers for advice? We mentioned previously that consumers might have to pay a fee to seek alternative dispute resolution. However, whether fees are merited is surely a question about the implementation of the Bill that the implementation group must examine. It must consider when consumers might be expected to pay for services, what a fair and reasonable price might be, how they might be able avoid such charges and what the consequences of such charges would be on the implementation of the Bill.
If the Minister said a little bit about the time scale, how often the implementation group has met and whether the group is considering the matter of charging, that would help the Committee and would satisfy our concerns that the group is doing the job it needs to do to ensure that the intention behind the Bill works on the ground.

Jennifer Willott: I will write to the hon. Lady with more details about the timetable of the implementation group.
Trading Standards will charge for some in-depth advice, but there will be free advice for businesses on all issues, and for consumers as well. I will write to the hon. Lady and provide more information on that.
The hon. Lady said that the Government were consulting on treating small businesses as consumers. We have had that debate a number of times, and I should like to clarify that we are not consulting on that. The FSB is doing some work on whether small businesses should be treated as consumers, and we have committed to responding to that report, but the Government are not currently consulting

Stella Creasy: I thank the Minister for her answer. She has said that the implementation group will look at the best way to provide information to businesses on consumer rights, which is a compliance issue, but also says that Trading Standards will be able to charge for providing advice to businesses. Will she clarify whether the implementation group will consider what is a fair price to charge businesses? After all, it is no good having it look at general advice but not specific in-depth advice, which she said might be charged for. There could be a gap there, and businesses could be too frightened to seek advice from Trading Standards on the new rights because they are worried that they might incur a fee. It is not unreasonable to want to clarify whether the implementation group will consider that and ensure that the sorts of advice that the Minister seems to intend will be provided—in-depth and, perhaps, sector-specific advice—will not be used as a cover for Trading Standards to make up the difference in its budgets by charging businesses for basic advice.
I also encourage the Minister to try to get to the Committee the plan of the group’s meetings. She has not answered the question about how many meetings have been held. I appreciate that she may not have all the details of the timetable, but surely she must know that. Has she attended one of the implementation group meetings, perhaps to feed back some concerns from the Committee? It would help to know that as well. [Interruption.] I see that she has an answer; if she wants to address the Committee, I should be happy to hear it.

Jennifer Willott: On the timetable for the implementation group, as I said, I will write to the hon. Lady with details about meetings and so on. I understand that Trading Standards will charge only for in-depth briefings to businesses, such as seminars and such events. There will be free basic advice for all businesses online.

Stella Creasy: I thank the Minister for that. I do not think that that is what Trading Standards is doing at the moment. It would help if the implementation group considered that. It sounds like it will be a donkey’s age before we get details about the implementation group meetings, and it does not sound like the Minister has been to one yet. I am sure she will go subsequently.
I am happy to withdraw the new clause. We have made our point; we really needed some information about what the implementation group was doing. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

David Amess: Order. As was stated at the beginning of today’s proceedings, I will call new clauses 7 to 9 for debate, as they are replacements for amendments 106 to 108.

New Clause 7  - Requirements for statutory regulators

‘(1) Within three months of Royal Assent of this Act, the Secretary of State shall set out in guidance requirements for all statutory regulators to provide—
(a) formal representation for consumers on all governance bodies;
(b) an annual competition and consumer rights health check within their industry which has been approved by the Consumer Association; and
(c) periodic consideration of whether there is a need for independent advice, free at the point of delivery, to ensure consumers’ rights are protected.
(2) If there is a need under subsection (1)(c), the Secretary of State shall review the case for the introduction of levies to support that provision.’.—(Stella Creasy.)

Brought up, and read the First time.

Stella Creasy: I beg to move, That the clause be read a Second time.
The new clause represents our concern, which we want to see dealt with in the Bill, about the consumer voice in the regulation of services. In particular, we want to ensure that every regulatory body has on it a direct representative of consumers who can therefore be held accountable for ensuring that a consumer perspective is provided across sectors.
We have already talked about the role of alternative dispute resolution and consumer rights for people seeking redress, but we all recognise that there have been some regulators that have not heard the consumer voice in making decisions about their role by dint of the fact they have not acted. Regardless of whether we have different ideas about how it could be reformed, I am sure we all recognise that the energy market is a good example of where there has been consistent and persistent concern that the regulator has not taken into account the views of consumers. We do not think that the energy market is alone in suffering a lack of competition, unfair practices to the detriment of consumers or a lack of consumer perspective in making decisions. It is always better to have a range of views and opinions around the table when dealing with governance.
We could also consider the banking market. I notice that there has been an announcement today on consumer detriment within the banking sector, which seems to reflect a concern that there needs to be a consumer perspective within the banking sector. The new clause would ensure that there is a voice at all times, not just at times of crisis, asking, “Hang on a minute: what does this mean for our consumers?” Members might argue that every single member of a regulatory body is surely there to represent the public interest, but as I said earlier, one can draw a distinction between public interest and consumer interest. After all, governance and individual consumers might have differing interests. A consumer voice would take on the specific role of the consumer interest.
We have already seen the benefits of that in the new Financial Conduct Authority, which has a dedicated consumer panel providing a distinctive voice for consumers in the organisation’s work. That prompted a number of concerns among the Committee when considering the Bill. We are seeking to learn from that experience and to ask how we can ensure similar representation across all organisations.

Laura Sandys: I feel very strongly about having a consumer voice, but in a strange way the hon. Lady is proposing doing something that creates a silo. Through regulation and departmental design we have one voice for the consumer, rather than the objective around which the majority of regulators are designed, which is to serve the consumer. That is not ingrained at every level within the regulators, so we need to consider the appointment structure. One needs to ensure that every single member of those regulators is a consumer champion. As a result, the new clause would silo that particular voice.

Stella Creasy: I thank the hon. Lady for her intervention. I hope this does not turn into a marital dispute, but if she takes that view, presumably she has a critique of the Financial Conduct Authority and the decision to have a dedicated consumer voice in that make-up, because that is what we are talking about. I disagree with her analysis that that creates a silo. It creates a spotlight on particular interests for consumers.
Where do I think the consumer interest and the public interest are slightly different? After all, we ask regulators to act in the public interest. Well, the energy market may be an example of where some of those concerns have come to the fore. People have rightly asked, “In whose interests has this regulator acted?” There will be points at which there are differences of opinion on the impact on consumers. Some might define it as a short-term vision versus a long-term vision, such as investment in energy infrastructure and who might account for it. We have tabled a new clause that would address precisely those questions about the impact on consumers.
The National Audit Office research raised some important points on the decisions that might be made at governance level and by regulators and whether they have separate, distinctive impacts on consumers. Which interest acts for the consumer? I do not accept the hon. Lady’s analysis that we can turn everyone into a consumer champion, because there will necessarily be competing interests. Surely it is better to have honest recognition of those competing interests and, therefore, a process for resolving them and for understanding that there may be policies that would act in the public interest but not necessarily in the consumer interest. The industry itself might have a perspective on those policies that it is important to hear and understand in a process, rather than simply to diminish the idea that the consumer is represented by default. People can wear several hats at once. We are trying both to have that spotlight for consumer perspectives on policy and to mainline it into the decision-making processes of regulators, rather than sidelining it. The hon. Member for South Thanet is right to suggest that it has been sidelined, but that is because it has not been explicit. The new clause would make it explicit.
Many of us welcome the different approach that the Financial Conduct Authority has taken by having a dedicated panel for some of its work. The work that the Financial Conduct Services Consumer Panel is going to do on credit cards, for example, will involve a view that is distinct from how one might look at other issues of financial regulation. That is not to say that each is not equally important, but they are different. That is the benefit that a consumer perspective can bring. There are a number of markets in which having a distinctive perspective for the consumer as opposed to the trader—and, indeed, the Government—would bring benefits through a diversity of thinking and perspective. That is what the new clause would do.
The new clause would also require an annual competition health check—a moment of pause and reflection, driven not just by regulators and politicians but through bringing in consumer voices, as an external challenge. I am sure that Government Members will recognise the benefits of bringing in external challenge—Lord knows, all of us sometimes experience it to the nth degree. The new clause would bring that challenge in through the introduction of the annual competition health check, which would bring in consumer bodies such as Which?, Citizens Advice and possibly the Federation of Small Businesses—we have looked at how that body could work within the process as well—to report back on how markets are working for consumers.
At the heart of the new clause, therefore, is the principle of preventing problems that I first talked about when we kicked off the Committee. Our approach to consumer rights is not simply about offering systems of redress but about trying to prevent problems. We want there to be early warning systems, and we want to have individuals who are accountable for the decisions being made and how those decisions might affect people, rather than individuals who simply deal with the mess when they have. We can all look at the banking market and the energy market and see the damage that has been done by not having a proactive, preventive approach; indeed, we will have seen it in our constituencies and learned about it from the conversations that we have been having.
We see having a consumer voice as very much a part of how to deal with such situations—it is not the entirety of the solution but it is certainly part of it. I will give an example from the banking market. We know that mis-selling of interest rate swaps has undermined 40,000 small businesses that should have been able to deal with the cost of living crisis by growing but instead were faced with those interest rate swaps. It was only because of pressure from groups such as Bully-Banks that the regulator finally started to take action in 2012, and most of the businesses affected have still not received compensation. If there had been a consumer voice to champion those issues—to hold people to account when decisions were being made and the OFT was looking at those issues—would a different decision have been made? Would those issues have been higher up the agenda? That is what having someone in the room who cannot be ignored—that is what a consumer voice often is—would have done.
Many of us have been contacted by publicans in our local communities who have had problems with restrictive practices. We recognise that there has not been a consumer voice within pub regulation. If we are looking at how to make a market work, we should surely hear from the people who benefit when a market is working well. It is after hearing from them to understand whether they are able to access information, services and goods in the way that is intended that one can make decisions about whether consumer detriment is being generated.
We recognise that the Competition and Markets Authority has a consumer issues brief—indeed, we have met representatives from that body and recognise that it is keen to expand that brief. We see the proposal in the new clause as complementing that process by trying to pin down how it will operate in reality. If the Minister is not prepared to support the new clause and ensure that there is a voice for consumers on all of our regulators—especially since the Government have dismantled the National Consumer Council—does she at least think that the provision of a consumer voice in the Financial Conduct Authority has been of benefit? If so, what lessons is she learning from that—what conversations are being held with other regulators to make sure that there are more active consumer voices within the mix of their discussions?
If the Minister is not going to support our new clause, what is she doing to ensure that we have a regular, periodic review of whether competition is operating properly across a range of sectors? Such a review must not simply be about waiting for the Competition and Markets Authority to get involved, but should look at all the information gathered by ombudsmen and regulators and ask whether it tells us that something is going wrong.
At the risk of repetition, I return to the subject of payday lenders. For several years, ombudsman and regulators were receiving reports of problems, but no one had the perspective to say that the failure to do anything about them, because it would have been complicated, was also having an impact. I would wager that having a consumer voice in the conversation would have highlighted the effect that the failure to do anything was having on everyday lives. We have seen the same thing in the energy market.

Sheila Gilmore: Will my hon. Friend explain how consumer representation might be structured? Does she envisage a model with a consumer panel to work with regulators? If, instead, one or two individuals were appointed, that would put a huge onus on such individuals to represent the consumer.

Stella Creasy: My hon. Friend makes a fair point. It would very much depend on the regulator and the governance body themselves. We have not specified the particular type of representation, because we recognise that it must fit in with the way a regulator works, but we would expect a regulator to consider precisely such issues. The new clause would require the Secretary of State to provide guidance on how that could be done. We would expect the Secretary of State to look at exactly those sorts of issues—whether it would be appropriate to have a separate, distinct panel, or a particular person or persons, or appointed roles.
The final provision in the new clause would require the Secretary of State to examine the possibility of levies for providing independent advice. Members will know that the Opposition are concerned that companies are mis-selling products, goods and services across various sectors in the UK. As a result, consumers face severe detriment, so they require independent advice on how to correct any problems and deal with any debt that has arisen. Again, I am thinking of payday lenders, some of which are making £1 million a week because the Government failed to act as quickly as they could have done to deal with the matter.
The new clause would allow, where appropriate, for levies on industries that were clearly shown to be causing consumer detriment. Such levies would pay for a system of redress that would provide advice and support to affected consumers. I can think of a number of industries where there would be a case for considering such a levy, because we are currently seeing that kind of mis-selling. Indeed, we believe that the next PPI scandal is but a heartbeat away.
Reviewing the case for the introduction of levies to support the provision of independent advice, free at the point of delivery, to ensure that consumer rights are protected, is another way to ensure that there is consumer redress and the consumer voice is heard. Even if the Government will not accept the new clause and the need to ensure formal representation, I hope that they will accept the need to hold to account industries that have caused such detriment to consumers and to ensure that they pay for the damage they have done by giving practical help to consumers.
I am interested to hear the Minister’s views on the provision of advice and whether she sees a role for industries in paying for such advice, given the damage they have done.

Jennifer Willott: It is, of course, important that consumers are properly represented in the regulated sectors and have their rights protected. All parties would completely agree with that. Nevertheless, I am not convinced that the provisions set out in the new clause are necessary, bearing in mind the nature of independent regulation and the consumer rights provisions that we are making elsewhere.
First and foremost, statutory regulators are independent of Government. In the context of new clause 7, I am referring to regulators with existing duties and functions with respect to consumers. It is important that the governance bodies of regulators with consumer interests are able to take account of all the duties and functions that the regulator is expected to carry out. Such bodies are likely to need people with skills and experience of consumer protection among their membership. Many regulators will have formal arrangements to consult external consumer representatives as part of their functioning.
The new clause would duplicate some of the current and future changes we are making to consumer rights. The new Competition and Markets Authority starts operating in April. The body is set up to protect consumers against cartels, take action in markets where there are competition issues, and suspend company mergers if they threaten competition in a market. The CMA will be under a duty to report annually on those areas, so the first two parts of the amendment are covered by those two elements.
In addition, as part of the Government’s reforms of the consumer landscape, we are developing closer links with consumer groups, and the CMA already works with the Citizens Advice service through the consumer protection partnership. There is quite a lot of working between the consumer groups and Government bodies to ensure that information is shared and the organisations work closely together. Given those reforms and the creation of the CMA, the proposed new clause represents an unnecessary duplication of effort, since they would already be doing the things required under the new clause.
On the third part of the new clause, the Citizens Advice service hosts the consumer helpline, providing advice on consumer rights and a host of issues in relation to the regulated industries. In 2012-13, the helpline dealt with almost 837,000 new cases; 91% of consumers reported that they would use the service again, and 60% said they could not have resolved the problem without the help and advice they had received. My Department provides central funding for the Citizens Advice consumer service, with calls relating to the energy and postal products met by industry levies. We do not believe there is a need at the moment to create additional levies. This service reports to the Government twice yearly on its performance against agreed standards.
The hon. Member for Walthamstow raised the issue of whether other regulators should follow the example of the FCA by setting up a specialist consumer panel. Of course, regulators and the Government need to take into account consumer interests through specialist panels—that is one way of doing it—but formal representation of consumer interests on boards risks setting a precedent for other interest groups, which could lead to deadlock in making regulatory decisions. Many regulators ensure they have the skills and experience of consumers on the board, without having a specific place on the board for a representative of a particular organisation.
I hope that I have responded to the three elements of the new clause. I have shown that it would duplicate effort that is already going on, so I ask the hon. Lady to withdraw the proposed new clause.

Stella Creasy: I thank the Minister for her response. I am a little confused by what she has said. She thinks it is important to have the views of consumers represented, in which case there will always be a possibility of deadlock, because competing views should be expressed. She surely does not want a deadlock—a psychological moment at 5.30 on a Tuesday afternoon—to be caused by groupthink, which is where people think the same thing because they are the same person. I am sure she would want to have a range of views expressed; ergo, she must think that having a consumer voice is important. The question is whether we have a primary consumer representative who, as in the consumer panel on the Financial Conduct Authority, is able to take up specific concerns about issues affecting consumers, as opposed to specific concerns coming from the industry, so that there is a process in which a range of views are expressed.
Of course, the way to deal with deadlock is to have democracy. It is an old-fashioned concept, I am sure, but that is not a reason for precluding a voice. The Minister is surely not suggesting that she would preclude consumer voices from regulators on the basis that that might lead to deadlock.
The Minister spoke against the role of levies in the energy and telecoms sector. Can she clarify whether she is against the role of a levy for the payday lending sector to cover the cost of providing debt advice to the 5 million—and rising—people who take out loans from such companies and get caught in a spiral of debt? It would be helpful if she could clarify that point.

Jennifer Willott: The hon. Lady obviously did not hear what I said. The calls that go to the Citizens Advice consumer service relating to energy and postal products are met by industry levies.

Stella Creasy: And the Minister did not quite answer the question. I was asking whether she opposed the use of levies on the payday lending industry to pay for debt advice. Do the Government support or oppose that? She has given an example of where levies have been used. The amendment is reasonable. Is the Government for or against levies in the payday lending industry?

Jennifer Willott: At the moment, we do not believe there is a need to create additional levies. The levies are funded by central funding.

Stella Creasy: So as we have seen our local debt advice services decimated by cuts to Citizens Advice and suchlike, we have seen payday lenders make £1 million a week.

Brooks Newmark: I beg to move—

David Amess: Order. I must advise the Committee that a speech cannot be interrupted. I have taken careful advice from the Clerk.

Stella Creasy: I was simply going to say, let us put it on the record that payday lenders are making £1 million a week, profiting from preying on our communities, and yet the Government do not see the case for a levy. They also do not seem to want a formal consumer voice. We are happy to withdraw the new clause, but I want to put our concerns about the two issues on the record. The Government do not want a consumer voice or to hold payday lenders to account in this way. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Mr Newmark.)

Adjourned till Thursday 13 March at half-past Eleven o’clock.